Advanced Drainage Systems (WMS) Q3 2026 earnings summary

Executive summary

• Net sales for Q3 FY26 rose 0.4% year-over-year to $693.4 million, with net income up 14.3% to $94.0 million and diluted EPS up 14.4% to $1.19.

• Adjusted EBITDA for Q3 grew 9.3% to $209.2 million, with margin improving by 250 basis points to 30.2% on favorable mix and pricing.

• Year-to-date net sales increased 3.7% to $2.4 billion, net income up 5.0% to $394.6 million, and diluted EPS up 5.2% to $5.02.

• Allied Products and Infiltrator segments drove growth, supported by new products, expanded distribution, and acquisitions.

• Completed the NDS acquisition, expanding the product portfolio and distribution channels.

Financial highlights

• Q3 gross profit increased 7.3% to $259.2 million, with gross margin at 37.4%; year-to-date gross profit rose 7.1% to $929.7 million, with margin at 39.2%.

• Year-to-date Adjusted EBITDA was $774.9 million, up 8.8%, with margin at 32.6%.

• Free cash flow for the nine months was $582.4 million, and net cash from operations was $779.1 million.

• Ended the quarter with $1.0 billion in cash and total liquidity of $1.6 billion.

• Net leverage at 0.5x as of December 31, 2025, and 1.5x post-NDS acquisition.

Outlook and guidance

• FY26 net sales guidance raised to $2.99–$3.04 billion; Adjusted EBITDA guidance increased to $930–$960 million, with margin expected at 31.1–31.6%.

• Guidance includes $40 million in revenue and a 20% EBITDA margin from NDS for the remainder of the fiscal year.

• Capital expenditures projected at approximately $250 million for FY26.

• Fourth quarter expected to be variable due to weather impacts and macroeconomic uncertainty.

• Sufficient liquidity is expected to meet obligations for at least the next twelve months.