Financial Performance - Revenue increased by 9% to $850 million, driven by strong performance in both non-residential and residential end markets [13][5] - Adjusted EBITDA grew by 17%, resulting in a margin of 33.8%, reflecting the resilience of the company's business model [13][11] - Free cash flow for the year-to-date reached $399 million, up from $238 million in the prior year, attributed to increased profitability and better working capital performance [15][16] Business Line Performance - Allied product sales increased by 13%, with notable growth in StormTech chambers, Nyloplast catch basins, and water quality products [5][6] - Infiltrator revenue surged by 25%, with 7% organic growth, driven by strong demand for tanks and advanced treatment products [6][7] - Pipe revenue saw a modest increase of 1%, with growth in HP pipe products offset by weakness in the agriculture market [7] Market Performance - Non-residential sales grew by 15%, with organic growth of 12% driven by strong performance in Allied products and HP pipe products [7][8] - The residential market showed mixed results, with strong growth in multi-family development but challenges in single-family housing starts due to high interest rates [8][9] - Geographic performance varied, with better land development activity in the Atlantic Coast and south-central U.S. [8] Company Strategy and Industry Position - The company remains committed to investing in both organic and inorganic growth, including the recent agreement to acquire NDS, which will enhance its product portfolio [9][10] - The strategic focus is on diversifying and increasing the mix of profitable Allied and Infiltrator products to capture more opportunities in water management [10][11] - The company operates in attractive water segments supported by secular tailwinds from climate change and increased awareness of stormwater management [9] Management Commentary on Operating Environment and Future Outlook - Management expressed caution regarding market demand in the second half of the year, reflecting potential risks from seasonality and economic factors [19][19] - The long-term outlook remains strong, supported by compelling demand for water management solutions across North America [12][19] - The company is focused on executing its long-term strategic plan to drive consistent growth and margin expansion [19] Other Important Information - The company plans to spend approximately $200 million-$225 million on capital expenditures for the full year, focusing on innovation and increasing recycling capacity [16][17] - The acquisition of NDS is expected to be accretive to adjusted earnings per share in the first year, with anticipated annual cost synergies of $25 million by year three [17][18] Q&A Session Summary Question: Outlook for end markets in the second half of the year - Management indicated a conservative outlook for the second half, reflecting potential demand degradation and uncertainty in the market [24][26] Question: Inventory levels in the channel - Management stated that inventory levels are appropriately sized for the current demand environment, with no unusual issues noted [26][27] Question: Margin expectations for the second half - Management emphasized that margin expectations are primarily driven by demand, with stable price-cost dynamics anticipated [30][31] Question: Residential business growth drivers - Management highlighted strong performance in multi-family developments and new product introductions as key growth drivers in the residential segment [39][41] Question: Integration progress of Orenco acquisition - Management reported that the integration is progressing well, with earnings growing faster than sales and positive customer feedback [90][89] Question: Revenue synergies from NDS acquisition - Management discussed potential revenue synergies from cross-selling opportunities and complementary product lines between ADS and NDS [100][101]