Advanced Drainage Systems, Inc.

Ladies and gentlemen, thank you for standing by. Today's conference call will begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience. Good morning, ladies and gentlemen, and welcome to Advanced Drainage Systems' second quarter of fiscal year 2026 results conference call. My name is Kayla, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you'd like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad. If you'd like to withdraw your question, again, press the star and 1. I would now like to turn the presentation over to your host for today's call, Mr. Mike Higgins, Vice President of Corporate Strategy and Investor Relations. Sir, you may begin.

Good morning, everyone. Thanks for joining us today. Here with me, I have Scott Barber, our President and CEO, and Scott Cottrell, our CFO. I would also like to remind you that we will discuss forward-looking statements Actual results may differ materially from those forward-looking statements because of various factors, including those discussed in our press release and the risk factors identified in our Form 10-K filed with the SEC. While we may update forward-looking statements in the future, we disclaim any obligation to do so. You should not place undue reliance on these forward-looking statements, all of which speak only as of today. Lastly, the press release we issued earlier this morning is posted on the investor relations section of our website. A copy of the release has also been included in an 8K submitted to the SEC. We will make a replay of this conference call available via webcast on the company website. I'll now turn the call over to Scott Barber.

Thank you, Mike, and good morning, everyone. Thank you all for joining us on today's call. ADS executed well this quarter in spite of a challenging market environment, driving growth at strong margins. In the second quarter, we delivered 9% revenue growth and 17% growth in adjusted EBITDA. This performance reflects ADS's strategy to prioritize higher growth, higher margin products, execute the material conversion strategy, and implement self-help initiatives to improve safety and productivity, all of which we executed exceptionally well this quarter. As we continue to deliver above-market growth in industry-leading margins, we remain committed to investing in both organic and inorganic growth to further strengthen our position as a leader in water management. Let me touch on a few highlights from this quarter. Allied product sales increased 13% with double-digit growth in several key products, including the StormTech retention detention chambers, the Nyloplast catch basins, and the water quality products, all of which benefited from new product introduced over the last year. Infiltrator revenue increased 25%, including Orenco, or 7% on an organic basis, driven by double-digit growth in both tanks and advanced treatment products launched in the last several years. Pipe revenue increased 1%, with double-digit growth in the HP pipe products and construction applications being offset by weakness in the agriculture market. Importantly, pricing remains stable. From an end market perspective, 15% non-residential sales growth was broad-based geographically across the U.S. Organic growth of 12% was driven by double-digit growth of allied products as well as the strong growth in HP pipe products. Inorganic results contributed 3% to the growth in the non-residential market. The residential end market was more mixed as interest rates continued to weigh on single-family housing starts, existing home sales, and land development activity. For the second quarter in a row, we experienced strong allied product growth in the multifamily development activity. From a geographic lens, land development activity was better in the Atlantic Coast and South Central US, but the DIY channel we service through big box retailers remains challenged. Infiltrator's core residential business significantly outperformed the market, and the continued outperformance by both companies gives us confidence that we have the right strategies, product portfolio, and go-to-market model to increase participation in the residential segment. Overall, we executed well in a challenging market environment and remain focused on driving profitable growth by executing these strategies, introducing new products and customer programs, pursuing acquisitions, and investing capital for long-term growth. We continue to build on the strong foundation of the ADS story, We operate in highly attractive water segments supported by secular tailwinds from changing climate patterns, as well as the increasing awareness of the societal value of proper stormwater and onsite wastewater management, ultimately driving long-term demand for the company's products. ADS is the only company with solutions that extend throughout the entire stormwater or onsite wastewater system on a national scale. Through our best-in-class portfolio of water management products, we deliver solutions that are safer, faster to install, and lower costs through savings on labor and equipment. We were excited to announce an agreement to acquire NDS in September, a US supplier of residential stormwater and irrigation products that complement the existing ADS product portfolio. This acquisition presents another opportunity for us to grow our allied product portfolio with NDS's differentiated offerings alongside our core pipe products, ultimately providing a broader solution set to capture, convey, store, and treat stormwater. We will continue to execute ADS's strategy to diversify and increase the mix of profitable allied and infiltrator products that enhance resiliency, support profitable growth, and enable ADS to pursue additional opportunities and water management products across a broader set of applications. The regulatory process remains ongoing, and we look forward to providing an update once available. The market outlook presented at the bottom left of chart 4 remains unchanged. Overall, the residential and non-residential end markets remain choppy. The recent outperformance is driven by strong execution by our employees, and I'm very proud of the team for their performance delivered in the challenging quarter. Their disciplined execution and commitment to continuous improvement resulted in our safest first half of the year on record, achieving a total recordable incident rate one half of the industry average. This performance reflects our ongoing focus on safety and operational excellence, which are foundational elements of our sustainable growth strategy. When you stack our strengths, the scale, product portfolio, go-to-market strategy, and the ability to invest in our business, people, and industry growth, you see ADS as a powerful value proposition. In summary, we continue to execute effectively in a challenging environment. Our self-help operational initiatives continue to bear fruit as demonstrated by the 33.8% adjusted EBITDA margin reported today. We will continue to increase the capacity of existing production facilities and add new capacity in strategic areas to meet customer demands. We are also highly focused on service and delivery experience for our customers, leveraging the new digital tools across the platform. While we navigate the near-term environment, we do so with an eye towards the future. We remain firmly committed to our long-term vision and will continue investing in the capabilities that will position us for future success. Overall, the long-term outlook for our business remains strong, supported by compelling secular tailwinds driving demand for water management solutions across North America. Now, I'll turn the call over to Scott Cottrell.