ADVANCED DRAINAGE SYSTEMS ANNOUNCES SECOND QUARTER FISCAL 2027 RESULTS
ADVANCED DRAINAGE SYSTEMS, INC. (WMS) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 ADVANCED DRAINAGE SYSTEMS ANNOUNCES SECOND QUARTER FISCAL 2027 RESULTS • Net sales increased 12.5% year-to-date • Organic net sales increased 2.3% year-to-date • Repurchased $375.1 million of common stock • Generated $458.2 million in cash from operations • Announced
How this was made
The 30-second read
Why it matters
The earnings release updates revenue guidance amid a softer demand environment, which may affect the stock's near‑term price action.
Market read
The earnings and acquisition news provide fresh material for traders; the revised outlook suggests potential downside pressure, while the acquisition could be a catalyst for longer‑term upside.
What to watch
Potential cost synergies from the StormTrap deal and continued price/cost advantages may support margins.
Second-quarter net sales increased 4.6% to $889.4 million, while Adjusted EBITDA was $286.8 million and fiscal 2027 net-sales guidance was updated to $3.300 billion to $3.400 billion.
Second-quarter sales rose with the NDS acquisition, but organic Stormwater sales declined 5.3%, net income from continuing operations fell 14.6%, Adjusted EBITDA declined 0.2%, and the Company cited softer demand in its updated revenue outlook.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Three months ended September 30, 2026 Net salesGAAP | $889.4M | – | 4.6% |
| Three months ended September 30, 2026 Cost of goods soldGAAP | 543,551 | – | – |
| Three months ended September 30, 2026 Gross profitGAAP | $345.9M | – | 1.7% |
| Three months ended September 30, 2026 Selling, general and administrative expenseGAAP | $129.6M | – | 8.7% |
| Three months ended September 30, 2026 Selling, general and administrative expense as a percentage of salesGAAP | 14.6% | – | – |
| Three months ended September 30, 2026 Loss (gain) on disposal of assets and costs from exit and disposal activitiesGAAP | 1,302 | – | – |
| Three months ended September 30, 2026 Intangible amortizationGAAP | 20,061 | – | – |
| Three months ended September 30, 2026 Income from operationsGAAP | 194,875 | – | – |
| Three months ended September 30, 2026 Interest expenseGAAP | 27,515 | – | – |
| Three months ended September 30, 2026 Income tax expenseGAAP | 44,206 | – | – |
| Three months ended September 30, 2026 Net income from continuing operationsGAAP | $133.6M | – | 14.6% decrease |
| Three months ended September 30, 2026 Net loss from discontinued operations, net of taxesGAAP | (23,522) | – | – |
| Three months ended September 30, 2026 Net incomeGAAP | 110,101 | – | – |
| Three months ended September 30, 2026 Net income attributable to ADSGAAP | $110.4M | – | – |
| Three months ended September 30, 2026 Diluted EPS from continuing operationsGAAP | $ 1.77 | – | 11.0% decrease |
| Three months ended September 30, 2026 Basic EPS from continuing operationsGAAP | $ 1.78 | – | – |
| Three months ended September 30, 2026 Diluted net income per shareGAAP | $ 1.46 | – | – |
| Three months ended September 30, 2026 Adjusted EBITDAnon-GAAP | $286.8M | – | 0.2% decrease |
| Three months ended September 30, 2026 Adjusted EBITDA marginnon-GAAP | 32.2% | – | – |
| Three months ended September 30, 2026 Adjusted Earnings per Share from Continuing Operationsnon-GAAP | $ 1.88 | – | – |
| Six months ended September 30, 2026 Net salesGAAP | $1.89B | – | 12.5% |
| Six months ended September 30, 2026 Cost of goods soldGAAP | 1,136,616 | – | – |
| Six months ended September 30, 2026 Gross profitGAAP | $753.9M | – | 12.4% |
| Six months ended September 30, 2026 Selling, general and administrative expenseGAAP | $260.4M | – | 16.7% |
| Six months ended September 30, 2026 Selling, general and administrative expense as a percentage of salesGAAP | 13.8% | – | – |
| Six months ended September 30, 2026 Income from operationsGAAP | 449,423 | – | – |
| Six months ended September 30, 2026 Net income from continuing operationsGAAP | $310.2M | – | 3.2% |
| Six months ended September 30, 2026 Net incomeGAAP | 281,016 | – | – |
| Six months ended September 30, 2026 Net income attributable to ADSGAAP | 278,960 | – | – |
| Six months ended September 30, 2026 Diluted EPS from continuing operationsGAAP | $ 4.02 | – | 5.0% |
| Six months ended September 30, 2026 Basic EPS from continuing operationsGAAP | $ 4.06 | – | – |
| Six months ended September 30, 2026 Diluted net income per shareGAAP | $ 3.64 | – | – |
| Six months ended September 30, 2026 Adjusted EBITDAnon-GAAP | $645.1M | – | 14.0% |
| Six months ended September 30, 2026 Adjusted EBITDA marginnon-GAAP | 34.1% | – | – |
| Six months ended September 30, 2026 Adjusted Earnings per Share from Continuing Operationsnon-GAAP | $ 4.36 | – | – |
| Six months ended September 30, 2026 Organic Net Salesnon-GAAP | $1.72B | – | 2.3% |
| Six months ended September 30, 2026 Net cash provided by operating activitiesGAAP | $458.2M | – | – |
| Six months ended September 30, 2026 Capital expendituresGAAP | (98,758) | – | – |
| Six months ended September 30, 2026 Free cash flownon-GAAP | $359.5M | – | – |
| Cash dividends declared per share for three months ended September 30, 2026GAAP | $ 0.20 | – | – |
| Cash dividends declared per share for six months ended September 30, 2026GAAP | $ 0.40 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Stormwater sales, three months ended September 30, 2026Stormwater sales include $77.3 million of revenue from the acquisition of National Diversified Sales (“NDS”). On an organic basis, Stormwater sales decreased 5.3%. | $712.1M | – | 6.2% |
| Wastewater sales, three months ended September 30, 2026Wastewater sales decreased $2.4 million, or 1.3%, to $177.3 million as compared to $179.7 million in the prior year quarter. | $177.3M | – | 1.3% decrease |
| Stormwater sales, six months ended September 30, 2026Stormwater sales include $172.0 million of revenue from the acquisition of NDS. On an organic basis, Stormwater sales increased 2.1%, driven by growth in the core non-residential construction end market. | $1.52B | – | 15.1% |
| Wastewater sales, six months ended September 30, 2026Wastewater sales increased $11.0 million, or 3.1%, to $369.1 million as compared to $358.1 million in the prior year period. | $369.1M | – | 3.1% |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
fiscal 2027 outlook
- Revenue$3.300 billion to $3.400 billion
- NoteAdjusted EBITDA is now expected to be in the range of $1.000 billion to $1.030 billion.
- NoteCapital expenditures are expected to be approximately $200 million.
Capital returns
- In the six months ended September 30, 2026, the Company repurchased 2.7 million shares of its common stock for a total cost of $375.1 million.
- Repurchase of common stock was (372,916) for the six months ended September 30, 2026.
- Cash dividends paid were (30,512) for the six months ended September 30, 2026.
- As of September 30, 2026, approximately $677.3 million of common stock may be repurchased under the Company's existing stock repurchase authorization.
- Cash dividends declared per share were $ 0.20 for the three months ended September 30, 2026 and $ 0.40 for the six months ended September 30, 2026.
What drove it
- Second-quarter net sales included the contribution from NDS.
- Gross-profit growth was primarily driven by the acquisition of NDS, as well as favorable price/cost more than offsetting unfavorable volume and transportation costs.
- Advanced wastewater treatment, stormwater capture and water quality products each grew double digits.
- First-half organic Stormwater sales increased 2.1%, driven by growth in the core non-residential construction end market.
- The Company announced a proposed acquisition of StormTrap, which it said complements and further diversifies its portfolio and creates cross-selling opportunities in non-residential and infrastructure markets.
Concerns
- Revenue in the second quarter was impacted by a larger than previously estimated pull forward of revenue into the first quarter.
- Second-quarter organic Stormwater sales decreased 5.3%.
- Net income from continuing operations decreased 14.6% and Adjusted EBITDA decreased 0.2% in the second quarter.
- The demand environment is softer today than when the Company initially issued guidance in May, driven by higher interest rates and ongoing geopolitical uncertainty.
- Selling, general and administrative expense as a percentage of sales was 14.6% compared with 14.0% in the prior year quarter, primarily driven by NDS and associated transaction costs.
- Net cash provided by operating activities and free cash flow were below the prior-year six-month period.
What to watch
- Whether favorable price/cost continues to more than offset unfavorable volume and transportation costs in the second half of fiscal 2027.
- Demand conditions in non-residential, residential, infrastructure and agricultural applications amid higher interest rates and geopolitical uncertainty.
- Organic Stormwater sales after the second-quarter 5.3% decline.
- Completion of the proposed StormTrap acquisition and the integration and realization of anticipated benefits from NDS and StormTrap.
- Execution against fiscal 2027 net-sales guidance of $3.300 billion to $3.400 billion and Adjusted EBITDA guidance of $1.000 billion to $1.030 billion.
Balance sheet and cash flow
- Net cash provided by operating activities was $458.2 million, as compared to $509.8 million in the prior year.
- Free cash flow was $359.5 million, as compared to $398.8 million in the prior year.
- Net debt was $1,619.9 million as of September 30, 2026, an increase of $71.0 million from March 31, 2026.
- ADS had total liquidity of $891.8 million, comprised of cash of $153.2 million as of September 30, 2026 and $738.6 million of availability under committed credit facilities.
- As of September 30, 2026, the Company’s trailing-twelve-month leverage ratio was 1.6 times Adjusted EBITDA.
- Cash was $ 153,245 as of September 30, 2026, compared with $ 223,012 as of March 31, 2026.
- Long-term debt obligations, net were 1,603,242 as of September 30, 2026, compared with 1,605,958 as of March 31, 2026.
Analysis
Advanced Drainage Systems reported second-quarter fiscal 2027 net sales of $889.4 million, up 4.6% from $850.4 million. The reported growth included $77.3 million of NDS revenue in Stormwater, while organic Stormwater sales declined 5.3% and Wastewater sales declined 1.3% to $177.3 million. Management said revenue was affected by a larger than previously estimated pull forward into the first quarter, while the current demand environment is softer than at the time of its May guidance.
Profitability remained supported by favorable price/cost, although quarterly earnings comparisons weakened. Gross profit rose 1.7% to $345.9 million, but selling, general and administrative expense increased 8.7% to $129.6 million and rose to 14.6% of sales from 14.0%. Net income from continuing operations declined 14.6% to $133.6 million, diluted EPS from continuing operations declined 11.0% to $1.77, and Adjusted EBITDA declined 0.2% to $286.8 million. Adjusted EBITDA margin was 32.2%, compared with 33.8% in the prior-year quarter.
First-half results were stronger than the quarterly exit rate. Six-month net sales increased 12.5% to $1,890.5 million, with organic net sales up 2.3%. Stormwater sales rose 15.1% to $1,521.4 million, including $172.0 million from NDS, and organic Stormwater sales increased 2.1%, driven by core non-residential construction. First-half Adjusted EBITDA increased 14.0% to $645.1 million and its 34.1% margin exceeded the prior-year period's 33.7%.
Cash generation remained substantial but below the prior-year period. Six-month operating cash flow was $458.2 million and free cash flow was $359.5 million, compared with $509.8 million and $398.8 million, respectively. The Company repurchased 2.7 million shares for a total cost of $375.1 million, held $153.2 million of cash, and reported net debt of $1,619.9 million and a trailing-twelve-month leverage ratio of 1.6 times Adjusted EBITDA. The Company also announced a proposed acquisition of StormTrap.
The fiscal 2027 outlook calls for net sales of $3.300 billion to $3.400 billion, Adjusted EBITDA of $1.000 billion to $1.030 billion, and approximately $200 million of capital expenditures. Management said lower materials inflation is mitigating the need for pricing actions included in its prior net-sales outlook and that the updated revenue outlook reflects softer demand. It also stated that the Adjusted EBITDA outlook is largely the same despite the change in net-sales guidance, citing new products, material conversion, price/cost management, productivity and disciplined capital deployment.
Management, verbatim
Our second quarter results demonstrate the resilience of our business model and the team's ability to execute in a challenging demand environment. Net sales increased 4.6% to $889.4 million, including the contribution from NDS, and we generated Adjusted EBITDA of $286.8 million, resulting in an Adjusted EBITDA margin of 32.2%.
Scott Barbour, President and Chief Executive Officer of ADS
Favorable price/cost has more than offset unfavorable volume and transportation costs, contributing to robust profitability in the quarter, which we expect to continue into the second half of the year.
Scott Barbour, President and Chief Executive Officer of ADS
The demand environment is softer today than when we initially issued guidance in May, driven by higher interest rates and ongoing geopolitical uncertainty.
Scott Barbour, President and Chief Executive Officer of ADS
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so no comparison of actual results with prior guidance is available.
- GAAP gross margin for the three months ended September 30, 2026 and prior-year quarter was not reported.
- GAAP gross margin for the six months ended September 30, 2026 and prior-year period was not reported.
- Quarterly operating cash flow, capital expenditures and free cash flow were not reported.
- Fiscal 2027 guidance for gross margin, operating expenses and tax rate was not reported.
- Prior-quarter comparisons were not reported for the operating metrics.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Advanced Drainage Systems (NYSE:WMS) filed a Form 8‑K announcing its Q2 FY2027 financial results and a proposed acquisition, providing the first public disclosure of these figures.
Ticker impact
Advanced Drainage Systems reported Q2 FY2027 results with net sales up 4.6% YoY, adjusted EBITDA margin at 32.2% and announced a proposed acquisition of StormTrap, while updating its revenue outlook amid softer demand.
likely downward pressure as updated revenue outlook signals softer demand
The new earnings numbers and revised guidance provide fresh material for traders; the updated demand outlook typically prompts a sell side bias.
Market effects
Water management sector may see increased scrutiny on demand trends and acquisition activity.
U.S. infrastructure and construction markets could influence regional earnings expectations.
Limited to investors focused on water infrastructure and related industrials.
Counterpoint
Acquisition of StormTrap could unlock new growth avenues, offsetting softer demand.
Key entities
- companyAdvanced Drainage Systems, Inc.
Water management solutions provider reporting FY2027 Q2 results.
- companyStormTrap
Target of the proposed acquisition to expand ADS's stormwater portfolio.
