Advanced Drainage Systems (WMS) Q1 2027 earnings summary

Executive summary

• Net sales rose 21% year-over-year to $1,001 million, driven by strong growth in both Stormwater and Wastewater segments and the NDS acquisition, which contributed $94.7–$95 million to revenue.

• Adjusted EBITDA increased 28.8% to $358.3 million, with margin expanding by 230 basis points to 35.8%, among the highest in company history.

• Net income from continuing operations rose 22.5% to $176.6 million; diluted EPS from continuing operations increased 22.8% to $2.26.

• Growth was driven by a diversified portfolio, disciplined price-cost management, material conversion, and operational execution.

• Favorable pricing offset inflationary pressures, with peak material inflation expected in Q2.

Financial highlights

• Stormwater sales increased 24% to $809 million, including $94.7 million from NDS; Wastewater sales rose 7.5% to $191.7 million.

• Gross profit improved 23.5% to $408 million, reflecting favorable price/cost, manufacturing efficiencies, and NDS integration.

• Free cash flow totaled $203 million for the quarter, down from $222 million year-over-year due to higher capital expenditures.

• Adjusted EBITDA margin improved to 35.8% from 33.5% year-over-year.

• Operating income rose to $254.5 million from $205.7 million; diluted EPS from continuing operations was $2.26, up from $1.84.

Outlook and guidance

• Fiscal 2027 net sales expected between $3.35 billion and $3.55 billion; adjusted EBITDA guidance of $1 billion to $1.05 billion.

• Adjusted EBITDA margin projected to be between 29.6% and 29.9%, down 170 to 200 basis points from FY26.

• Capital expenditures for fiscal 2027 are expected to be approximately $200 million.

• Management expects sufficient liquidity to meet working capital, capex, and debt obligations for at least the next twelve months.

• First half revenue to represent 55%-60% of annual total, with normal seasonality affected by revenue pull-forward.