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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-36557
ADVANCED DRAINAGE SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware51-0105665
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
4640 Trueman Boulevard, Hilliard, Ohio 43026
(Address of Principal Executive Offices, Including Zip Code)
(614) 658-0050
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareWMSNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer☒Accelerated Filer☐
Non-Accelerated Filer☐Smaller Reporting Company☐
Emerging Growth Company☐  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 1, 2024, the registrant had 77,536,148 shares of common stock outstanding, which excludes 195,615 shares of unvested restricted common stock. The shares of common stock trade on the New York Stock Exchange under the ticker symbol “WMS.”

TABLE OF CONTENTS
   
 Page
   
 
   
 
   
 
   
 
   
 
   
 
   
   
   
   
   
   
   
   
  
   
   
   
- ii -

Forward-Looking Statements
This Form 10-Q includes forward-looking statements. Some of the forward-looking statements can be identified by the use of terms such as “believes,” “expects,” “may,” “will,” “would,” “should,” “could,” “seeks,” “predict,” “potential,” “target,” “outlook,” “continue,” “intends,” “plans,” “projects,” “estimates,” “anticipates” or other comparable terms or the negative of those terms or similar expressions. These forward-looking statements include all matters that are not related to present facts or current conditions or that are not historical facts. They appear in a number of places throughout this Form 10-Q and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our consolidated results of operations, financial condition, liquidity, prospects, growth strategies, and the industries in which we operate and include, without limitation, statements relating to our future performance.
Forward-looking statements are subject to known and unknown risks and uncertainties, many of which are beyond our control. We caution you that forward-looking statements are not guarantees of future performance and that our actual consolidated results of operations, financial condition, liquidity and industry development may differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. In addition, even if our actual consolidated results of operations, financial condition, liquidity and industry development are consistent with the forward-looking statements contained in this Form 10-Q, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors could cause actual results to differ materially from those contained in or implied by the forward-looking statements, including those reflected in forward-looking statements relating to our operations and business, the risks and uncertainties discussed in this Form 10-Q (including under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”), and those described from time to time in our other filings with the SEC. Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include:
•fluctuations in the price and availability of resins and other raw materials and our ability to pass any increased costs of raw materials on to our customers in a timely manner;
•disruption or volatility in general business and economic conditions in the markets in which we operate;
•cyclicality and seasonality of the non-residential and residential construction markets and infrastructure spending;
•the risks of increasing competition in our existing and future markets;
•uncertainties surrounding the integration and realization of anticipated benefits of acquisitions;
•the effect of any claims, litigation, investigations or proceedings, including those described under “Part II - Item 1. Legal Proceedings” of this Form 10-Q;
•the effect of weather or seasonality;
•the loss of any of our significant customers;
•the risks of doing business internationally;
•the risks of conducting a portion of our operations through joint ventures;
•our ability to expand into new geographic or product markets;
•the risk associated with manufacturing processes;
•the effect of global climate change;
•our ability to protect against cybersecurity incidents and disruptions or failures of our IT systems;
•our ability to assess and monitor the effects of artificial intelligence, machine learning, and robotics on our business and operations;
•our ability to manage our supply purchasing and customer credit policies;
•our ability to control labor costs and to attract, train and retain highly qualified employees and key personnel;
•our ability to protect our intellectual property rights;
•changes in laws and regulations, including environmental laws and regulations;
•our ability to appropriately address any environmental, social or governance concerns that may arise from our activities;
•the risks associated with our current levels of indebtedness, including borrowings under our existing credit agreement and outstanding indebtedness under our existing senior notes; and
•other risks and uncertainties, including those listed under “Part I - Item 1A. Risk Factors” in the Fiscal 2024 Form 10-K.
All forward-looking statements are made only as of the date of this report and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.
- iii -
PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except par value)
 September 30, 2024 March 31, 2024
ASSETS   
Current assets:   
Cash$613,020 $490,163 
Receivables (less allowance for doubtful accounts of $4,769 and $4,849, respectively)
357,636323,576
Inventories487,232464,200
Other current assets34,03222,028
Total current assets1,491,9201,299,967
Property, plant and equipment, net955,434876,351
Other assets:
Goodwill617,147617,183
Intangible assets, net328,924352,652
Other assets142,325122,760
Total assets$3,535,750 $3,268,913 
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of debt obligations$11,130 $11,870 
Current maturities of finance lease obligations26,23318,015
Accounts payable273,293254,401
Other accrued liabilities152,091154,260
Accrued income taxes4,5901,076
Total current liabilities467,337439,622
Long-term debt obligations (less unamortized debt issuance costs of $8,737 and $9,759, respectively)
1,255,1181,259,522
Long-term finance lease obligations90,27261,661
Deferred tax liabilities154,574156,705
Other liabilities76,18370,704
Total liabilities2,043,4841,988,214
Commitments and contingencies (see Note 8)
Mezzanine equity:
Redeemable common stock: $0.01 par value; 6,045 and 6,682 shares outstanding, respectively
98,231108,584
Total mezzanine equity98,231108,584
Stockholders’ equity:
Common stock; $0.01 par value: 1,000,000 shares authorized; 83,359 and 82,283
 shares issued, respectively; 71,463 and 70,868 shares outstanding, respectively
11,69011,679
Paid-in capital1,255,7941,219,834
Common stock in treasury, at cost(1,219,438)(1,140,578)
Accumulated other comprehensive loss(30,689)(29,830)
Retained earnings1,359,1001,092,208
Total ADS stockholders’ equity1,376,4571,153,313
Noncontrolling interest in subsidiaries17,57818,802
Total stockholders’ equity1,394,0351,172,115
Total liabilities, mezzanine equity and stockholders’ equity$3,535,750 $3,268,913 
See accompanying Notes to Condensed Consolidated Financial Statements.
- 4 -
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In thousands, except per share data)
 Three Months Ended September 30,Six Months Ended September 30,
 2024 202320242023
Net sales$782,610 $780,220 $1,597,946 $1,558,266 
Cost of goods sold488,669 477,543 971,551 924,129 
Gross profit293,941 302,677 626,395 634,137 
Operating expenses:
Selling, general and administrative94,132 91,725 188,184 178,236 
Loss (gain) on disposal of assets and costs from exit and disposal activities
617 123 909 (13,181)
Intangible amortization11,816 12,792 23,711 25,594 
Income from operations187,376 198,037 413,591 443,488 
Other expense:
Interest expense23,156 21,941 45,980 43,653 
Interest income and other, net(6,956)(7,506)(14,072)(11,055)
Income before income taxes171,176 183,602 381,683 410,890 
Income tax expense40,920 47,476 90,806 102,534 
Equity in net income of unconsolidated affiliates(918)(901)(2,619)(2,576)
Net income131,174 137,027 293,496 310,932 
Less: net income attributable to noncontrolling interest792 1,225 1,712 1,478 
Net income attributable to ADS$130,382 $135,802 $291,784 $309,454 
Weighted average common shares outstanding:
Basic77,542 78,606 77,541 78,756 
Diluted78,110 79,307 78,194 79,475 
Net income per share:
Basic$1.68 $1.73 $3.76 $3.93 
Diluted$1.67 $1.71 $3.73 $3.89 
See accompanying Notes to Condensed Consolidated Financial Statements.

- 5 -
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited) (In thousands)
 Three Months Ended September 30,Six Months Ended September 30,
 2024202320242023
Net income$131,174 $137,027 $293,496 $310,932 
Currency translation loss(46)(4,864)(3,795)(1,632)
Comprehensive income131,128 132,163 289,701 309,300 
Less: other comprehensive (loss) income attributable to noncontrolling interest
(1,148)(605)(2,936)446 
Less: net income attributable to noncontrolling interest792 1,225 1,712 1,478 
Total comprehensive income attributable to ADS$131,484 $131,543 $290,925 $307,376 
See accompanying Notes to Condensed Consolidated Financial Statements.
- 6 -
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)
 Six Months Ended September 30,
 2024 2023
Cash Flows from Operating Activities   
Net income$293,496 $310,932 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization85,90573,961
Deferred income taxes(2,270)519
Loss (gain) on disposal of assets and costs from exit and disposal activities909(13,181)
Stock-based compensation13,96016,234
Amortization of deferred financing charges1,0221,022
Fair market value adjustments to derivatives1,024(1,889)
Equity in net income of unconsolidated affiliates(2,619)(2,576)
Other operating activities(6,124)756
Changes in working capital:
Receivables(35,565)(43,530)
Inventories(24,750)79,215
Prepaid expenses and other current assets(4,804)(2,228)
Accounts payable, accrued expenses, and other liabilities30,14239,629
Net cash provided by operating activities350,326458,864
Cash Flows from Investing Activities
Capital expenditures(112,182)(82,625)
Proceeds from disposition of assets—19,979 
Other investing activities640446
Net cash used in investing activities(111,542)(62,200)
Cash Flows from Financing Activities
Payments on syndicated Term Loan Facility(3,500)(3,500)
Payments on Equipment Financing(2,665)(4,458)
Payments on finance lease obligations(11,756)(5,452)
Repurchase of common stock(69,922)(101,564)
Cash dividends paid(24,917)(22,224)
Proceeds from exercise of stock options8,6942,623
Payment of withholding taxes on vesting of restricted stock units(10,576)(8,811)
Other financing activities2—
Net cash used in financing activities(114,640)(143,386)
Effect of exchange rate changes on cash(1,142)3
Net change in cash123,002253,281
Cash and restricted cash at beginning of period495,848217,128
Cash and restricted cash at end of period$618,850 $470,409 
 
RECONCILIATION TO BALANCE SHEET
Cash$613,020 
Restricted cash (included in Other assets in the Condensed Consolidated Balance Sheets)5,830
Total cash and restricted cash$618,850 
See accompanying Notes to Condensed Consolidated Financial Statements.
- 7 -
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY
(Unaudited) (In thousands)
Common
Stock
Paid
-In
Capital
Common
Stock in
Treasury
Accumulated
Other Compre-hensive
Loss
Retained Earnings
Total ADS
Stockholders’ Equity
Non-
controlling
Interest in
 Subsidiaries
Total
Stock-
holders’
Equity
 
Redeemable Common Stock
Total
Mezzanine
Equity
SharesAmountSharesAmount  Shares Amount
Balance at July 1, 202379,651$11,654 $1,147,449 10,110$(977,812)$(25,399)$788,780 $944,672 $18,797 $963,469 9,132$148,397 $148,397 
Net income——————135,802135,8021,225137,027———
Other comprehensive loss—————(4,259)—(4,259)(605)(4,864)———
Common stock dividends ($0.14 per share)
——————(11,031)(11,031)—(11,031)———
Share repurchases———507(61,836)——(61,836)—(61,836)———
KSOP redeemable common stock conversion926915,039————15,048—15,048(926)(15,048)(15,048)
Exercise of common stock options35—1,756————1,756—1,756———
Restricted stock awards23———(69)——(69)—(69)———
Stock-based compensation expense
——9,331————9,331—9,331———
Other
——(1)————(1)—(1)———
Balance at September 30, 202380,635$11,663 $1,173,574 10,617 $(1,039,717)$(29,658)$913,551 $1,029,413 $19,417 $1,048,830 8,206 $133,349 $133,349 
Balance at 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 
Net income— — — — — — 309,454 309,454 1,478 310,932 — — — 
Other comprehensive (loss) income— — — — — (2,078)— (2,078)446 (1,632)— — — 
Common stock dividends ($0.28 per share)
— — — — — — (22,118)(22,118)— (22,118)— — — 
Share repurchases— — — 981 (109,907)— — (109,907)— (109,907)— — — 
KSOP redeemable common stock conversion1,223 12 19,859 — — — — 19,871 — 19,871 (1,223)(19,871)(19,871)
Exercise of common stock options56 1 2,622 — — — — 2,623 — 2,623 — — — 
Restricted stock awards99 1 — 25 (2,415)— — (2,414)— (2,414)— — — 
Performance-based restricted stock units200 2 — 72 (6,396)— — (6,394)— (6,394)— — — 
Stock-based compensation expense——16,234————16,234—16,234———
Other
——(5)————(5)—(5)———
Balance at September 30, 202380,635 $11,663 $1,173,574 10,617 $(1,039,717)$(29,658)$913,551 $1,029,413 $19,417 $1,048,830 8,206 $133,349 $133,349 

See accompanying Notes to Condensed Consolidated Financial Statements.
- 8 -
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY
(Unaudited) (In thousands)
Common
Stock
Paid
-In
Capital
Common
Stock in
Treasury
Accumulated
Other Compre-hensive
Loss
Retained Earnings
Total ADS
Stockholders’ Equity
Non-
controlling
Interest in
 Subsidiaries
Total
Stock-
holders’
Equity
 
Redeemable Common Stock
Total
Mezzanine
Equity
SharesAmountSharesAmount  Shares Amount
Balance at July 1, 202482,973$11,687 $1,241,525 11,775$(1,199,469)$(31,791)$1,241,161 $1,263,113 $17,934 $1,281,047 6,386$103,766 $103,766 
Net income——————130,382130,382792131,174———
Other comprehensive income (loss)—————1,102—1,102(1,148)(46)———
Common stock dividends ($0.16 per share)
——————(12,443)(12,443)—(12,443)———
Share repurchases———120(19,950)——(19,950)—(19,950)———
KSOP redeemable common stock conversion34135,532————5,535—5,535(341)(5,535)(5,535)
Exercise of common stock options26—1,716————1,716—1,716———
Restricted stock awards19——1(19)——(19)—(19)———
Stock-based compensation expense
——6,983————6,983—6,983———
Other
——38————38—38———
Balance at September 30, 202483,359$11,690 $1,255,794 11,896 $(1,219,438)$(30,689)$1,359,100 $1,376,457 $17,578 $1,394,035 6,045 $98,231 $98,231 
Balance at 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 
Net income— — — — — — 291,784 291,784 1,712 293,496 — — — 
Other comprehensive loss— — — — — (859)— (859)(2,936)(3,795)— — — 
Common stock dividends ($0.32 per share)
— — — — — — (24,892)(24,892)— (24,892)— — — 
Share repurchases— — — 420 (68,283)— — (68,283)— (68,283)— — — 
KSOP redeemable common stock conversion637 6 10,347 — — — — 10,353 — 10,353 (637)(10,353)(10,353)
Exercise of common stock options223 2 8,692 — — — — 8,694 — 8,694 — — — 
Restricted stock awards98 1 — 27 (4,640)— — (4,639)— (4,639)— — — 
Performance-based restricted stock units93 1 — 34 (5,937)— — (5,936)— (5,936)— — — 
Stock-based compensation expense— — 13,960 — — — — 13,960 — 13,960 — — — 
ESPP Share Issuance2512,963————2,964—2,964———
Other
——(2)————(2)—(2)———
Balance at September 30, 202483,359 $11,690 $1,255,794 —11,896 $(1,219,438)$(30,689)$1,359,100 $1,376,457 $— $17,578 —$1,394,035 — —6,045 $98,231 $98,231 

See accompanying Notes to Condensed Consolidated Financial Statements.
- 9 -
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1.BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business - Advanced Drainage Systems, Inc., incorporated in Delaware, and its subsidiaries (collectively referred to as “ADS” or the “Company”) designs, manufactures and markets innovative water management solutions in the stormwater and onsite septic wastewater industries, providing superior drainage solutions for use in the construction and agriculture marketplace. ADS’s products are used across a broad range of end markets and applications, including non-residential, infrastructure and agriculture applications.
The Company is managed and reports results of operations in three reportable segments: Pipe, Infiltrator Water Technologies Ultimate Holdings, Inc. (“Infiltrator”) and International. The Company also reports the results of its Allied Products and all other business segments as Allied Products and Other.
Historically, sales of the Company’s products have been higher in the first and second quarters of each fiscal year due to favorable weather and longer daylight conditions accelerating construction activity during these periods. Seasonal variations in operating results may also be impacted by inclement weather conditions, such as cold or wet weather, which can delay projects.
Basis of Presentation - The Company prepares its Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Condensed Consolidated Balance Sheet as of March 31, 2024 was derived from audited financial statements included in the Annual Report on Form 10-K for the year ended March 31, 2024 (“Fiscal 2024 Form 10-K”). The accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, of a normal recurring nature, necessary to present fairly its financial position as of September 30, 2024, the results of operations for the three and six months ended September 30, 2024 and cash flows for the six months ended September 30, 2024. The interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements, including the notes thereto, filed in the Company’s Fiscal 2024 Form 10-K.
Principles of Consolidation - The Condensed Consolidated Financial Statements include the Company, its wholly-owned subsidiaries, its majority-owned subsidiaries and variable interest entities 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 Condensed Consolidated Balance Sheets and the related equity earnings from these investments are included in Equity in net income of unconsolidated affiliates in the Condensed Consolidated Statements of Operations. All intercompany balances and transactions have been eliminated in consolidation.
Recent Accounting Guidance
Improvements to Reportable Segment Disclosures - In November 2023, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update (“ASU”) to amend ASC 280, Segment Reporting to enhance segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The amendments are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The amendments must be applied retrospectively to all periods presented in the financial statements. The Company is currently evaluating the impact of this standard on the Consolidated Financial Statements.
Improvements to Income Tax Disclosures - In December 2023, the FASB issued an 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 amendments may be applied prospectively or retrospectively and are effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on the Consolidated Financial Statements.
- 10 -
Disaggregation of Income Statement Expenses - In November 2024, the FASB issued new guidance requiring additional disclosure of the nature of certain expenses included in the income statement as well as disclosure of selling expenses. The requirements will be applied prospectively with the option for retrospective application. The new standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this standard on the Consolidated Financial Statements.
2.REVENUE RECOGNITION
Revenue Disaggregation - The Company disaggregates net sales by Domestic, International and Infiltrator and further disaggregates Domestic and International by product type, consistent with its reportable segment disclosure. This disaggregation level best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Refer to “Note 11. Business Segments Information” for the Company’s disaggregation of Net sales by reportable segment.
Contract Balances - The Company recognizes a contract asset representing the Company’s right to recover products upon the receipt of returned products and a contract liability for the customer refund. The following table presents the balance of the Company’s contract asset and liability as of the periods presented:
(In thousands)September 30, 2024March 31, 2024
Contract asset - product returns$1,828 $1,353 
Refund liability5,219 3,920 
3.LEASES
Nature of the Company’s Leases - The Company has operating and finance leases for plants, yards, corporate offices, tractors, trailers and other equipment. The Company’s leases have remaining terms of less than one year to 13 years. A portion of the Company’s yard leases include an option to extend the leases for up to five years. The Company has included renewal options which are reasonably certain to be exercised in its right-of-use assets and lease liabilities.
4.INVENTORIES
Inventories as of the periods presented consisted of the following:
(In thousands)September 30, 2024March 31, 2024
Raw materials$114,388 $106,662 
Finished goods372,844357,538
Total inventories$487,232 $464,200 
- 11 -
5.NET INCOME PER SHARE AND STOCKHOLDERS' EQUITY
Net Income per Share - The following table presents information necessary to calculate net income per share for the periods presented, 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:
 Three Months Ended September 30,Six Months Ended September 30,
(In thousands, except per share data)2024202320242023
NET INCOME PER SHARE—BASIC:   
Net income available to common stockholders – Basic
$130,382 $135,802 $291,784 $309,454 
Weighted average number of common shares outstanding – Basic
77,542 78,606 77,541 78,756 
Net income per common share – Basic$1.68 $1.73 $3.76 $3.93 
NET INCOME PER SHARE—DILUTED:
Net income available to common stockholders – Diluted
$130,382 $135,802 $291,784 $309,454 
Weighted average number of common shares outstanding – Basic
77,542 78,606 77,541 78,756 
Assumed restricted stock52 62 76 54 
Assumed exercise of stock options504 618 564 600 
Assumed performance-based restricted stock units12 21 13 65 
Weighted average number of common shares outstanding – Diluted
78,11079,30778,19479,475
Net income per common share – Diluted$1.67 $1.71 $3.73 $3.89 
Potentially dilutive securities excluded as anti-dilutive
7 23 11 62 
6.RELATED PARTY TRANSACTIONS
ADS Mexicana - ADS conducts business in Mexico and Central America through its joint venture, ADS Mexicana, S.A. de C.V. (“ADS Mexicana”). ADS owns 51% of the outstanding stock of ADS Mexicana and consolidates ADS Mexicana for financial reporting purposes.
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 borrowings. 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 both September 30, 2024 and March 31, 2024, there were no borrowings outstanding under the Intercompany Note.
South American Joint Venture - The Tuberias Tigre - ADS Limitada joint venture (the “South American Joint Venture”) manufactures and sells HDPE corrugated pipe in certain South American markets. ADS owns 50% of the South American Joint Venture. ADS is the guarantor of 50% of the South American Joint Venture’s credit arrangement, and the debt guarantee is shared equally with the joint venture partner. The Company’s maximum potential obligation under this guarantee is $5.5 million as of September 30, 2024. The maximum borrowings permitted under the South American Joint Venture’s credit facility are $11.0 million. The Company does not anticipate any required contributions related to the balance of this credit arrangement. As of September 30, 2024 and March 31, 2024, there was no outstanding principal balance for the South American Joint Venture’s credit facility including letters of credit.
- 12 -
7.DEBT
Long-term debt as of the periods presented consisted of the following:
(In thousands)September 30, 2024 March 31, 2024
Term Loan Facility$416,750 $420,250 
Senior Notes due 2027350,000350,000 
Senior Notes due 2030500,000500,000 
Revolving Credit Facility—— 
Equipment Financing8,23510,901 
Total1,274,9851,281,151
Less: Unamortized debt issuance costs(8,737)(9,759)
Less: Current maturities(11,130)(11,870)
Long-term debt obligations$1,255,118 $1,259,522 
Senior Secured Credit Facilities - In May 2022, the Company entered into a Second Amendment (the “Second Amendment”) to the Company's Base Credit Agreement with Barclays Bank PLC, as administrative agent under the Term Loan Facility and PNC Bank, National Association, as new administrative agent under the Revolving Credit Facility. Among other things, the Second Amendment (i) amended the Base Credit Agreement by increasing the Revolving Credit Facility (the “Amended Revolving Credit Facility”) from $350 million to $600 million (including an increase of the sub-limit for the swing-line sub-facility from $50 million to $60 million), (ii) extended the maturity date of the Revolving Credit Facility to May 26, 2027, (iii) revised the “applicable margin” to provide an additional step-down to 175 basis points (for Term Benchmark based loans) and 75 basis points (for base rate loans) in the event the consolidated senior secured net leverage ratio is less than 2.00 to 1.00, and (iv) reset the “incremental amount” and the investment basket in non-guarantors and joint ventures. The Second Amendment also revised the reference interest rate from LIBOR to SOFR for both the Amended Revolving Credit Facility and the Term Loan Facility. Letters of credit outstanding at September 30, 2024 and March 31, 2024 amounted to $10.5 million and $11.2 million, respectively, and reduced the availability of the Revolving Credit Facility.
Senior Notes due 2027 - On September 23, 2019, the Company issued $350.0 million aggregate principal amount of 5.0% Senior Notes due 2027 (the “2027 Notes”) pursuant to an Indenture, dated September 23, 2019 (the “2027 Indenture”), among the Company, the guarantors party thereto (the “Guarantors”) and U.S. Bank National Association, as Trustee (the “Trustee”).
Senior Notes due 2030 - On June 9, 2022, the Company issued $500.0 million aggregate principal amount of 6.375% Senior Notes due 2030 (the “2030 Notes”) pursuant to an Indenture, dated June 9, 2022 (the “2030 Indenture”), among the Company, the Guarantors and the Trustee.
Equipment Financing - The assets under the Equipment Financing acquired are titled to the Company and included in Property, plant and equipment, net on the Company's Condensed Consolidated Balance Sheet. The equipment financing has an initial term of between 12 and 84 months, based on the life of the equipment, and bears a weighted average interest rate of 1.7% as of September 30, 2024. The current portion of the equipment financing is $4.1 million, and the long-term portion is $4.1 million at September 30, 2024.
Valuation of Debt - The carrying amounts of current financial assets and liabilities approximate fair value because of the immediate or short-term maturity of these items. The following table presents the carrying and fair value of the Company’s 2027 Notes, 2030 Notes and Equipment Financing for the periods presented:
 September 30, 2024 March 31, 2024
(In thousands)Fair ValueCarrying ValueFair Value Carrying Value
Senior Notes due 2027$346,388 $350,000 $339,780 $350,000 
Senior Notes due 2030510,905 500,000 502,890 500,000 
Equipment Financing8,113 8,235 10,475 10,901 
Total fair value$865,406 $858,235 $853,145 $860,901 
The fair values of the 2027 Notes and 2030 Notes were determined based on quoted market data for the Company’s 2027 Notes and 2030 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
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period. The categorization of the framework used to evaluate the 2027 Notes, 2030 Notes and Equipment Financing are considered Level 2. The Company believes the carrying amount of the remaining long-term debt, including the Term Loan Facility and Revolving Credit Facility, is not materially different from its fair value as the interest rates and terms of the borrowings are similar to currently available borrowings.
8.COMMITMENTS AND CONTINGENCIES
Purchase Commitments - The Company has historically secured supplies of resin raw material by agreeing to purchase quantities during a future given period at a fixed price. These purchase contracts typically ranged 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 September 30, 2024. The Company also enters into equipment purchase contracts with manufacturers.
Litigation and Other Proceedings - The Company is involved from time to time in various legal proceedings that arise in the ordinary course of business, including but not limited to commercial disputes, environmental matters, employee related claims, intellectual property disputes and litigation in connection with transactions including acquisitions and divestitures. The Company does not believe that such litigation, claims, and administrative proceedings will have a material adverse impact on the Company’s financial position or results of operations. The Company records a liability when a loss is considered probable, and the amount can be reasonably estimated.
9.INCOME TAXES
The Company’s effective tax rate will vary based on a variety of factors, including overall profitability, the geographical mix of income before taxes and related tax rates in jurisdictions where it operates and other one-time charges, as well as the occurrence of discrete events. For the three months ended September 30, 2024 and 2023, the Company utilized an effective tax rate of 23.9% and 25.9%, respectively, to calculate its provision for income taxes. For the six months ended September 30, 2024 and 2023, the Company utilized an effective tax rate of 23.8% and 25.0%, respectively, to calculate its provision for income taxes. State and local income taxes increased the effective rate for the three and six months ended September 30, 2024 and 2023.
10. STOCK-BASED COMPENSATION
ADS has several programs for stock-based payments to employees and non-employee members of its Board of Directors, including stock options, performance-based restricted stock units and restricted stock. The Company recognized stock-based compensation expense in the following line items of the Condensed Consolidated Statements of Operations for the periods presented:
Three Months Ended
September 30,		Six Months Ended
September 30,
(In thousands)2024202320242023
Component of income before income taxes:
Cost of goods sold$1,455 $1,344 $2,796 $2,157 
Selling, general and administrative expenses5,5287,98711,16414,077
Total stock-based compensation expense$6,983 $9,331 $13,960 $16,234 
The following table summarizes stock-based compensation expense by award type for the periods presented:
 Three Months Ended
September 30,		Six Months Ended
September 30,
(In thousands)2024202320242023
Stock-based compensation expense:  
Stock Options$1,563 $1,307 $2,998 $2,741 
Restricted Stock2,6552,0544,889 4,081 
Performance-based Restricted Stock Units1,8845,0354,108 7,919 
Employee Stock Purchase Plan400381946 381 
Non-Employee Directors4815541,019 1,112 
Total stock-based compensation expense$6,983 $9,331 $13,960 $16,234 
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2017 Omnibus Incentive Plan - The 2017 Incentive 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.
Restricted Stock - During the six months ended September 30, 2024, the Company granted 0.1 million shares of restricted stock with a grant date fair value of $13.9 million.
Performance-based Restricted Stock Units (“Performance Units”) - During the six months ended September 30, 2024, the Company granted 0.1 million performance units at a grant date fair value of $11.6 million.
Options - During the six months ended September 30, 2024, the Company granted 0.1 million nonqualified stock options under the 2017 Incentive Plan with a grant date fair value of $7.9 million. The Company estimates the fair value of stock options using a Black-Scholes option-pricing model. The following table summarizes the assumptions used to estimate the fair value of stock-options during the period presented:
 Six Months Ended September 30, 2024
Common stock price$177.38
Expected stock price volatility45.5%
Risk-free interest rate4.5%
Weighted-average expected option life (years)6
Dividend yield0.36%

Employee Stock Purchase Plan (“ESPP”) - In July 2022, the Company’s stockholders approved 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. The offering periods are six months in duration beginning either January 1 or July 1 and ending June 30 and December 31.

11.BUSINESS SEGMENTS INFORMATION
The Company operates its business in three distinct reportable segments: “Pipe”, “International” and “Infiltrator.” “Allied Products & Other” represents the Company’s Allied Products and all other business segments. The Chief Operating Decision Maker (the “CODM”) evaluates segment reporting based on Net Sales and Segment Adjusted Gross Profit. The Company calculated Segment Adjusted Gross Profit as Net sales less Costs of goods sold, depreciation and amortization, stock-based compensation and non-cash charges. A measure of assets is not applicable, as segment assets are not regularly reviewed by the CODM for evaluating performance or allocating resources.
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The following table sets forth reportable segment information with respect to the amount of Net sales contributed by each class of similar products for the periods presented:
 Three Months Ended
 September 30, 2024September 30, 2023
(In thousands)Net Sales  Intersegment Net Sales  Net Sales from External Customers Net Sales  Intersegment Net Sales  Net Sales from External Customers
Pipe$425,099 $(14,611)$410,488 $427,997 $(12,284)$415,713 
Infiltrator148,690 (20,198)128,492 133,731 (17,553)116,178 
International
International - Pipe44,445 (3,437)41,008 52,407 (3,284)49,123 
International - Allied Products & Other15,613 (68)15,545 17,025 (14)17,011 
Total International60,058 (3,505)56,553 69,432 (3,298)66,134 
Allied Products & Other191,114 (4,037)187,077 185,696 (3,501)182,195 
Intersegment Eliminations(42,351)42,351 — (36,636)36,636 — 
Total Consolidated$782,610 $— $782,610 $780,220 $— $780,220 
Six Months Ended
September 30, 2024September 30, 2023
(In thousands)Net SalesIntersegment Net SalesNet Sales from External CustomersNet SalesIntersegment Net SalesNet Sales from External Customers
Pipe$871,278 $(29,365)$841,913 $856,569 $(20,043)$836,526 
Infiltrator303,720 (45,010)258,710 275,217 (36,131)239,086 
International
International - Pipe88,372 (7,290)81,082 89,585 (3,799)85,786 
International - Allied Products & Other33,292 (116)33,176 32,623 (26)32,597 
Total International121,664 (7,406)114,258 122,208 (3,825)118,383 
Allied Products & Other391,687 (8,622)383,065 369,141 (4,870)364,271 
Intersegment Eliminations(90,403)90,403 — (64,869)64,869 — 
Total Consolidated$1,597,946 $— $1,597,946 $1,558,266 $— $1,558,266 
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The following sets forth certain financial information attributable to the reportable segments for the periods presented:
 Three Months Ended
September 30,		Six Months Ended
September 30,
(In thousands) 2024202320242023
Segment Adjusted Gross Profit  
Pipe$115,422 $125,856 $257,659 $286,505 
Infiltrator86,135 73,663 172,550 147,927 
International17,445 21,339 37,108 37,368 
Allied Products & Other107,324 106,239 221,191 212,424 
Intersegment Eliminations(394)(454)(1,569)(2,509)
Total$325,932 $326,643 $686,939 $681,715 
Depreciation and Amortization
Pipe$21,033 $13,663 $38,998 $28,391 
Infiltrator6,164 5,534 12,359 10,892 
International1,