Key Factors Affecting Our Results of Operations

Our leading position in the pipe market has allowed us to increase organic growth of our Allied Products & Other. We also expect to expand our Allied Product offerings through acquisitions.

In order to reduce the volatility of raw material costs in the future, our raw material strategies for managing our costs include the following:

Executive Summary of Our Fiscal Year 2022 Results

We operate our business in three distinct reportable segments: "Pipe", "International" and "Infiltrator." "Allied Products & Other" represents our Allied Products and all other business segments.

Infiltrator - Infiltrator is a leading national provider of plastic leachfield chambers and systems, septic tanks and accessories, primarily for use in residential applications. Infiltrator products are used in onsite septic wastewater treatment systems in the United States and Canada.

Fiscal Year Ended March 31, 2022 Compared with Fiscal Year Ended March 31, 2021

The following table summarizes our operating results as a percentage of net sales that have been derived from our Consolidated Financial Statements for the fiscal years ended March 31, 2022 and 2021. We believe this presentation is useful to investors in comparing historical results.

Cost of goods sold - ESOP acceleration and special dividend compensation

Equity in net income of unconsolidated affiliates (1,586)

Less: net income attributable to the non-

Net sales - The following table presents net sales to external customers by reportable segment for the fiscal years ended March 31, 2022 and 2021.

Cost of goods sold and Gross profit - The following table presents gross profit by reportable segment for the fiscal years ended March 31, 2022 and 2021.

Selling, general and administrative expenses - The following table presents selling, general and administrative expenses as a percentage of sales for the fiscal years ended March 31, 2022 and 2021.

Selling, general and administrative expenses for the fiscal year ended March 31, 2022 increased $42.3 million from the same period in fiscal 2021 and as a percentage of sales, decreased by 2.3%. The increase in Selling, general and

Selling, general and administrative - ESOP acceleration and special dividend compensation - In fiscal 2022, ESOP acceleration compensation expense of $11.3 million was allocated to selling, general and administrative expenses which did not occur in fiscal 2021.

Intangible amortization - Intangible amortization decreased by $9.7 million primarily due the accelerated method of amortization for customer relationships.

Income tax expense - The following table presents the effective tax rates for the fiscal years presented:

Loss on disposal of assets and costs from exit and disposal activities

ESOP acceleration and special dividend compensation (a)

The following table summarizes our available liquidity under our Revolving Credit Facility as of March 31, 2022:

In addition to the available liquidity above, we have the ability to borrow up to $1.3 billion under our Term Loan Facility, subject to leverage ratio restrictions.

Working Capital and Cash Flows

an increase in cash provided by operating activities. Our use of cash during fiscal 2020 was primarily related to the Acquisition and repayment of our previous debt arrangements.

Operating Cash Flows - During fiscal 2022, cash provided by operating activities was $274.9 million. Cash flow from operating activities in fiscal 2022 was primarily driven by operating income offset by investments in working capital.

Financing Cash Flows - During fiscal 2022, cash used in financing activities was $251.1 million. During fiscal 2022, ADS repurchased shares for $292.0 million.

Employee Stock Ownership Plan ("ESOP")

Impact on Common Stock Outstanding - The impact on the number of common shares outstanding will be as shares are converted, the number of common shares outstanding will increase.

Debt and Capitalized Lease Obligations

The Senior Secured Credit Facility includes customary representations, warranties, covenants and events of default.

The Indenture contains customary events of default, including, among other things, payment default, failure to comply with covenants or agreements contained in the Indenture or the Senior Notes and certain provisions related to bankruptcy events. The Indenture also contains customary negative covenants.

For further information, see "Note 11. Debt" to the Consolidated Financial Statements. We were in compliance with our debt covenants as of March 31, 2022.

Critical Accounting Policies and Estimates

accounting policies, see "Note 1. Background and Summary of Significant Accounting Policies" to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" included in this Form 10-K.

carrying value for fiscal years

provision for impairment in a future

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