Advanced Drainage Systems (WMS) Q1 2026 earnings summary

Executive summary

• Net sales increased 1.8% year-over-year to $829.9 million, driven by acquisitions and growth in non-residential and residential construction markets, with stable pricing and strong Infiltrator segment performance from the Orenco acquisition.

• Adjusted EBITDA rose 1.0% to $278.2 million, representing a 33.5% margin, among the highest in company history.

• Net income declined 11.2% to $144.1 million, with diluted EPS down 10.7% to $1.84, impacted by higher SG&A and weather-related project delays.

• New product launches and the acquisitions of River Valley Pipe and Orenco Systems supported growth and expanded offerings.

• Operational execution remained strong despite wet weather and high interest rates delaying project installations.

Financial highlights

• Adjusted EBITDA margin was 33.5%, nearly flat year-over-year.

• Free cash flow increased to $222.4 million, up from $125.7 million year-over-year.

• Total liquidity as of June 30, 2025, was $1.23 billion, with $638 million in cash and leverage ratio at 0.9x.

• Capital expenditures were $52.6 million for the quarter; full-year guidance is $200–$225 million.

• Gross profit decreased 0.6% to $330.4 million, with gross margin at 39.8%.

Outlook and guidance

• Fiscal 2026 net sales expected between $2.825 billion and $2.975 billion, with adjusted EBITDA guidance of $850 million to $910 million.

• CapEx guidance for FY26 is $200–$225 million, with $105 million in open orders as of June 30, 2025.

• Guidance ranges remain unchanged amid uncertain demand; management expects sufficient liquidity for at least the next twelve months.