What Advanced Drainage Systems, Inc. told the SEC could break it.

Advanced Drainage Systems' cost of goods sold is driven by HDPE and PP resins, its principal raw materials, whose prices fluctuate with crude oil and natural gas prices and resin-supplier capacity; a 1% increase in resin price raises COGS by ~$4.3 million, and the company cannot reliably estimate its ability to pass through increases.

“A 1% increase in the price of resin would increase our cost of goods sold by approximately $4.3 million. Inflation Risk - Our cost of goods sold is subject to inflationary pressures and price fluctuations of the raw materials we use, primarily HDPE and PP resins.”

Advanced Drainage Systems' ten largest customers generated approximately 50% of net sales in fiscal 2026, and it does not have long-term arrangements with many customers, so they may cease purchasing without notice; loss of a significant customer or customer consolidation could materially harm results.

“Our ten largest customers generated approximately 50% o f our net sales in fiscal 2026. Because we do not have long-term arrangements with many of our customers, such customers may cease purchasing our products without notice or upon short notice to us.”

New tariff policies, alongside resin price/availability fluctuations, are cited by ADS as a risk to obtaining adequate resin supplies and passing through price increases; its cyclical non-residential, residential, agricultural and infrastructure end markets are also sensitive to tariffs and other trade policies.

“Fluctuations in the price and availability of resins, our principal raw materials, new tariff policies and our inability to obtain adequate supplies of resins from suppliers and pass on resin price increases to customers could adversely affect our business, financial condition, results of operations and cash flows.”