This resulted in one of the most profitable third quarters in our history with a 30.2% Adjusted EBITDA margin. Infiltrator revenue increased 2% with good activity in the Southeast and the South. The Orenco acquisition is now fully lapped, and its impact is embedded in our reported growth. Growth in tanks continues to be driven by conversion, product line expansion, and additional distribution.
Leachfield sales remain resilient despite the market sluggishness, and advanced treatment systems continue to gain share in residential due to new product launches and the growth in commercial systems. Pipe revenue was down slightly, with growth in the HP Pipe products being offset by weaker sales into the residential and infrastructure markets. From an in-market perspective, sales in our core non-residential market increased 5% with growth driven by sales in the Southeast, Midwest, and up the Atlantic Coast into the Northeast. Moving to profitability, Adjusted EBITDA increased 9% despite the flat revenue base, resulting in a 250 basis points increase in the Adjusted EBITDA margin to 30.2%.
We are excited to have closed the NDS acquisition on Monday of this week. Overall, the long-term outlook for our business remains strong, supported by compelling secular tailwinds driving demand for water management solutions across North America. Today, my comments will focus on cash flow, capital allocation, and our updated guidance. Jumping to slide seven, I'd like to start by highlighting the fact that year-to-date, we generated $779 million in cash from operations, converting more than 100% of our Adjusted EBITDA into cash.
| Metric | Period | Current guidance |
|---|---|---|
| Fiscal 2026 revenue (midpoint) | FY2026 | $3.015 billion midpoint (increased), including ~$40 million from NDS |
| Fiscal 2026 Adjusted EBITDA (midpoint) | FY2026 | $945 million midpoint (increased) |
| Fiscal 2026 Adjusted EBITDA margin | FY2026 | 31.1% to 31.6%, up 50-100 basis points versus prior year |
| Non-residential in-market demand | FY2026 | Down low-to-mid single digits |
| NDS contribution | FY2026 (final two months) | ~$40 million revenue at ~20% EBITDA margin |
| CapEx outlook | FY2026 | Raised by ~$40 million at the midpoint, driven by timing of spend and assets placed in service |
| Metric | YoY | Note |
|---|---|---|
| Adjusted EBITDA margin | +250 basis points to 30.2% | Favorable price/cost, stronger product mix toward Allied and Infiltrator, capital invested over prior years, and cost improvement programs started over a year ago |
| Adjusted EBITDA | +9% | Profitability increases across Pipe, Allied Products, and Infiltrator despite a flat revenue base |
| Allied Products sales | +8% | Growth in StormTech storage chambers, Nyloplast capture structures, and water quality products from new product introductions |
| Infiltrator revenue | +2% | Good activity in the Southeast and South; growth in tanks from conversion, product line expansion, and additional distribution; Orenco now fully lapped |
| Pipe revenue | Down slightly | HP Pipe growth offset by weaker residential and infrastructure sales; pricing stable and materials favorable versus prior year |
| Core non-residential in-market sales | +5% | Growth in the Southeast, Midwest, and up the Atlantic Coast into the Northeast |
| Year-to-date cash from operations | +$239 million (+44%) to $779 million | Effective working capital management, increased profitability, and lower cash taxes primarily from bonus depreciation |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Mix shift toward Allied and Infiltrator | Growth algorithm to sell Allied faster than Pipe over many years | Targeting 50% or better of revenue in Allied and Infiltrator for a more resilient profit profile, with these segments carrying 50%+ adjusted gross margins and growing at roughly 2x the Pipe business | — |
| NDS acquisition | Long-pursued target management had eyed for a long time | Closed Monday of the call week, funded almost entirely with cash on hand; reported in the Allied and Other segments; ~$25 million cost run-rate synergies by year three | — |
| Orenco integration | Acquired just over a year ago with a 1,000-basis-point margin expansion target | Ahead of plan on synergies, integrated into Infiltrator's commercial team, with an 80% reduction in TRIR since acquisition | — |
| Capital allocation and leverage | ~70% of total capital from fiscal 2020-2026 deployed to CapEx and acquisitions; guardrails of 1x-2x net leverage | Post-NDS leverage ~1.5x; new $1 billion buyback (total authorization $1.148 billion); priority remains organic investment plus tuck-in M&A at $150M-$300M EV | — |
| Self-help / cost improvement programs | Programs started 16-18 months ago across materials, conversion, logistics, and recycling | Gained momentum over the past three quarters, working better than expected and contributing to margin expansion | — |
| Investor Day | — | Third Investor Day scheduled for June 18, 2026 in Columbus, Ohio, to cover growth priorities, NDS and Orenco, profitability resiliency, capital deployment, and new medium-term financial targets | — |
| Capital markets access | — | Expect to access capital markets this fiscal year primarily to address near-term maturities and extend the weighted average maturity, not to add incremental leverage | — |