Financial Data and Key Metrics Changes - Revenue increased by 9% to $850 million, reflecting strong performance despite market challenges [5][13] - Adjusted EBITDA grew by 17%, resulting in a margin of 33.8%, demonstrating the resilience of the business model [11][13] - Free cash flow for the year-to-date reached $399 million, up from $238 million in the prior year, driven by increased profitability and better working capital performance [15][16] Business Line Data and Key Metrics Changes - Allied product sales rose by 13%, with significant growth in StormTech chambers, Nyloplast catch basins, and water quality products [5][6] - Infiltrator revenue surged by 25%, with 7% organic growth attributed to new 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 Data and Key Metrics Changes - Non-residential sales grew by 15%, driven by broad-based geographic growth across the U.S., with organic growth of 12% [7][8] - The residential market showed mixed results, with strong growth in multi-family development but challenges in single-family housing starts due to interest rates [8][10] - Land development activity was stronger in the Atlantic Coast and south-central U.S., while the DIY channel faced challenges [8] Company Strategy and Development Direction - The company remains committed to investing in both organic and inorganic growth, including the recent agreement to acquire NDS, a supplier of stormwater and irrigation products [9][10] - The strategy focuses on diversifying and increasing the mix of profitable Allied and Infiltrator products to enhance resiliency and support growth [10][11] - The company aims to leverage its scale, product portfolio, and operational excellence to drive long-term growth in water management solutions [11][12] Management's Comments 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 [18][19] - The long-term outlook remains strong, supported by secular tailwinds driving demand for water management solutions [12][19] - Management highlighted the importance of safety and operational excellence, achieving the safest first half of the year on record [11][12] Other Important Information - The company ended the quarter with a net leverage of 0.7 turns and over $1.4 billion in available liquidity, including $813 million in cash [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] 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, implying slight degradation year-over-year due to uncertain demand [24][26] Question: Inventory levels in the channel - Management noted that inventory levels are appropriately sized for the current demand environment, with no unusual issues observed [26][27] Question: Margin expectations for the second half - Management expects stable price-cost dynamics, with margins driven by demand and top-line performance [30][31] Question: Residential business growth drivers - Growth in the residential segment was attributed to new products and strong participation in multi-family developments [38][41] Question: Integration progress of Orenco acquisition - Integration is progressing well, with earnings growing faster than sales and positive customer feedback [87][90] Question: Potential revenue synergies from NDS acquisition - Management highlighted complementary product lines and opportunities for cross-selling between ADS and NDS products [99][100] Question: Long-term margin profile expectations - Management sees opportunities for margin expansion through product mix, innovation, and capital allocation strategies [106]

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]

Financial Data and Key Metrics Changes - Revenue increased by 9% to $850 million, with adjusted EBITDA growing by 17% and achieving a margin of 33.8% [11][12][9] - Free cash flow generated year-to-date was $399 million, compared to $238 million in the prior year, driven by increased profitability and better working capital performance [12][14] Business Line Data and Key Metrics Changes - Allied product sales increased by 13%, with strong growth in StormTech chambers, Nyloplast catch basins, and water quality products [4][5] - Infiltrator revenue rose by 25%, with 7% organic growth, driven by tanks and advanced treatment products [5] - Pipe revenue increased by 1%, with growth in HP pipe products offset by weakness in the agriculture market [5] Market Data and Key Metrics Changes - Non-residential sales grew by 15%, with organic growth of 12% driven by Allied products and strong HP pipe product growth [5] - The residential market showed mixed results, with strong growth in multi-family development but challenges in single-family housing starts due to interest rates [6][7] Company Strategy and Development Direction - The company remains committed to investing in both organic and inorganic growth, including the acquisition of NDS, a supplier of residential stormwater and irrigation products [7][8] - The strategy focuses on diversifying and increasing the mix of profitable Allied and Infiltrator products to enhance resiliency and support growth [8][9] Management's Comments 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 [16][17] - The long-term outlook remains strong, supported by secular tailwinds driving demand for water management solutions [10][11] Other Important Information - The company achieved its safest first half of the year on record, with a total recordable incident rate half of the industry average [9] - 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 [15] Q&A Session Summary Question: Outlook for end markets in the second half of the year - Management indicated a conservative outlook, expecting some degradation year-over-year, with demand being the riskiest part of the forecast [21][23] Question: Inventory levels in the channel - Management noted that inventory levels are sized correctly for the current uncertain demand environment, with no unusual inventory issues [25][26] Question: Sustainability of growth in the residential segment - Management highlighted strong growth driven by new products and programs with builders, particularly in multi-family developments [36][38] Question: Impact of government shutdown on demand - Management acknowledged that the government shutdown creates friction in the market, affecting shipment releases but not necessarily orders [34][35] Question: Integration and synergy capture from Orenco acquisition - Management reported that integration is progressing well, with earnings growing faster than sales and synergies exceeding expectations [82][85] Question: Pricing and material costs outlook - Management confirmed that pricing remains stable, with no expected degradation in price-cost dynamics for the second half of the year [62][63] Question: Long-term margin profile expectations - Management expressed confidence in the potential for margin expansion through product mix, innovation, and capital allocation strategies [102][104]