Advanced Drainage Systems Q1 Earnings Call Highlights

Record first-quarter performance: Fiscal 2027 net sales reached $1 billion, up 21% year over year, while adjusted EBITDA rose 29% to $358 million and the margin expanded to 35.8%. Results benefited from organic growth, the NDS acquisition and $25 million–$30 million of customer purchases pulled forward ahead of price increases.

Demand was mixed across markets: Stormwater revenue increased 24%, supported by non-residential construction, data centers, warehouses and storage products, while organic residential sales were flat amid affordability concerns and high interest rates. NDS contributed $95 million in quarterly sales, though cross-selling benefits remain limited so far.

Outlook unchanged but near-term margins face pressure: The company maintained fiscal 2027 sales guidance of $3.35 billion–$3.55 billion and adjusted EBITDA guidance of $1 billion–$1.05 billion. Management expects higher resin and transportation costs to weigh on second-quarter margins, partly offset by pricing actions, while continuing investments in recycling, capacity and shareholder returns.

Advanced Drainage Systems NYSE: WMS reported first-quarter fiscal 2027 net sales of $1 billion, up 21% from a year earlier, as organic growth, the contribution from NDS and customer purchases ahead of price increases supported results. The company said it recorded more than $1 billion in quarterly revenue for the first time. Organic revenue, excluding NDS, rose 9%. However, management estimated that $25 million to $30 million of revenue was pulled into the first quarter from the second quarter as customers sought to purchase before price increases took effect. Excluding that pull-forward, organic revenue growth was in the mid-single digits.

Adjusted EBITDA increased 29% to $358 million, producing a 35.8% adjusted EBITDA margin, up 230 basis points from 33.5% a year earlier. Chief Financial Officer Scott Cottrill said the margin was the company’s second highest on record.

Stormwater revenue increased 24% to $809 million, while organic stormwater sales rose 10%, driven by pipe and allied products. Wastewater revenue increased 8%, supported by double-digit growth in tanks and residential advanced-treatment products. President and CEO Scott Barbour said non-residential organic sales grew 14%, with resilient activity in commercial construction and large projects such as data centers and warehouses. Management also cited growth in institutional construction and continued demand for water-quality, storage and capture products. The company’s stormwater storage category within allied products grew 18% during the quarter. Barbour pointed to product additions in the StormTech chambers line, the acquisition of Cultec and a partnership to market Aquabox plastic crates in the U.S. for projects requiring a tighter footprint.

Residential sales increased 29%, primarily reflecting NDS. On an organic basis, overall residential results were flat. Infiltrator residential revenue rose by double digits, driven by tanks and residential advanced-treatment systems, while the company experienced weakness in retail and residential land development within stormwater. Barbour attributed residential-market pressure to affordability concerns and elevated interest rates.

NDS contributed $95 million in quarterly sales and posted year-over-year growth, according to management. Barbour said the quarter was NDS’s strongest seasonal quarter, although the company is still assessing the acquired business’s longer-term seasonal patterns. Management said it is pursuing cross-selling opportunities but has not yet generated substa...