Advanced Drainage Systems Reports Strong First-Quarter Fiscal 2027 Results as Revenue Surpasses $1 Billion
Advanced Drainage Systems, Inc. (NYSE: WMS), a leading manufacturer of innovative water management solutions for the stormwater and onsite wastewater industries, has announced strong financial results for the first quarter of fiscal 2027, highlighting continued demand for its products, successful integration of the National Diversified Sales (NDS) acquisition, and sustained profitability despite a cautious market outlook.
For the quarter ended June 30, 2026, the company generated net sales of more than $1 billion for the first time in a fiscal first quarter, reflecting broad-based growth across its business. Higher customer demand, strategic pricing actions, favorable product mix, and contributions from its recently acquired NDS business all played an important role in driving revenue and earnings growth.
Strong Quarterly Performance
Advanced Drainage Systems reported first-quarter net sales of $1.001 billion, representing a 20.6% increase compared with $829.9 million in the same period last year. The strong performance was supported by healthy organic growth and the addition of NDS, which the company acquired in February to strengthen its position in residential stormwater management and landscape irrigation.
President and Chief Executive Officer Scott Barbour said the quarter unfolded largely in line with management expectations. While some customer purchases were accelerated ahead of announced pricing actions, the company also continued to benefit from the resilience of its diversified water management platform and healthy demand across multiple end markets.
According to Barbour, domestic construction market sales increased 20% during the quarter, with growth recorded across every product category and customer segment. He noted that the company experienced higher order activity as customers purchased products before price increases took effect, while seasonal demand patterns also influenced quarterly results.
Margin Expansion Reflects Operational Strength
Profitability improved significantly during the quarter as Advanced Drainage Systems successfully balanced pricing initiatives against inflationary cost pressures.
Adjusted EBITDA increased 28.8% to $358.3 million, compared with $278.2 million during the prior-year quarter. The company’s Adjusted EBITDA margin expanded to 35.8%, up from 33.5% a year earlier, representing an improvement of 230 basis points.
Management attributed the higher margins to favorable sales volumes, disciplined pricing strategies, manufacturing efficiencies, and continued cost management. Although transportation and raw material costs remained elevated, pricing actions helped offset inflationary pressures while preserving profitability.
Barbour emphasized that strong demand in the non-residential construction market combined with customer purchases ahead of pricing changes contributed to favorable volume growth. These factors, together with disciplined execution across operations, supported improved margins in both the Stormwater and Wastewater business segments.
Stormwater Business Continues to Lead Growth
The Stormwater segment remained the company’s primary growth engine during the quarter.
Stormwater sales increased 24.2% to $809.4 million, compared with $651.5 million during the same period last year. Approximately $94.7 million of this increase came from the acquisition of National Diversified Sales.
Excluding the impact of the acquisition, organic Stormwater sales still grew 9.7%, reflecting healthy demand for both pipe products and allied products. The company said strength was evident across residential, commercial, and infrastructure applications, demonstrating the broad appeal of its water management solutions.
Management noted that the NDS acquisition continues to exceed expectations by expanding the company’s reach in residential stormwater management while strengthening its landscape irrigation offerings. In addition, NDS has accelerated growth in the Allied Products category, allowing the company to provide customers with more comprehensive water management solutions.
Barbour said Advanced Drainage Systems continues to leverage its expanded product portfolio by selling integrated solutions rather than individual products, creating greater value for customers while increasing market share.
Wastewater Segment Also Posts Gains
The Wastewater business also delivered positive results during the quarter.
Sales increased 7.5% to $191.7 million, compared with $178.4 million in the prior-year period. The steady growth reflects ongoing demand for onsite wastewater management products across residential and commercial markets.
Together, the company’s Stormwater and Wastewater businesses continue to benefit from long-term investment in water infrastructure, environmental sustainability, and modern drainage systems.
Gross Profit and Earnings Improve
Higher sales volumes and improved operating efficiency translated into stronger overall earnings.
Gross profit increased 23.5% to $408.0 million, compared with $330.4 million in the first quarter of fiscal 2026. The improvement was driven by contributions from the NDS acquisition, higher production volumes, favorable pricing relative to costs, and manufacturing efficiencies. These gains were partially offset by increased transportation expenses.
Selling, general and administrative (SG&A) expenses rose to $130.8 million, an increase of 25.8% from $104.0 million a year earlier. As a percentage of sales, SG&A represented 13.1%, compared with 12.5% in the previous year. Management indicated that most of the increase reflected the integration and operating costs associated with the NDS acquisition.
Net income from continuing operations reached $176.6 million, up 22.5% from $144.1 million during the comparable quarter last year.
Diluted earnings per share from continuing operations increased 22.8% to $2.26, compared with $1.84 in the prior-year quarter, highlighting the company’s ability to convert higher revenue into improved shareholder returns.
Healthy Cash Flow and Strong Balance Sheet
Advanced Drainage Systems maintained a solid financial position during the quarter while continuing to invest in growth and return capital to shareholders.
Net cash provided by operating activities totaled $260.4 million, compared with $275.0 million in the same period last year.
Free cash flow reached $203.2 million, compared with $222.4 million in the prior-year quarter. Although cash generation declined slightly year over year, it remained robust and provides flexibility for future investments.
Net debt stood at $1.603 billion as of June 30, 2026, representing an increase of $54.5 million compared with the end of fiscal 2026. Despite the increase, the company’s leverage remained conservative, with a trailing twelve-month leverage ratio of 1.5 times Adjusted EBITDA.
Liquidity remained strong at $900.9 million, consisting of $162.3 million in cash and $738.6 million available under committed credit facilities.
Share Repurchase Program Continues
Advanced Drainage Systems also continued returning capital to shareholders through its share repurchase program.
During the first quarter, the company repurchased approximately 1.6 million shares of common stock at a total cost of $228.5 million.
As of June 30, 2026, approximately $822.5 million remained available under the existing share repurchase authorization, providing management with continued flexibility to repurchase shares when appropriate.
Fiscal 2027 Outlook Reaffirmed
Despite reporting an exceptionally strong start to the fiscal year, management remains cautious regarding the broader demand environment.
Barbour acknowledged that market conditions remain mixed across regions and end markets, with several variables affecting customer purchasing behavior. Nevertheless, he expressed confidence in the company’s long-term strategy, citing favorable industry trends, continued investment in water infrastructure, disciplined capital allocation, and the company’s position as a leading pure-play water management company.
Based on current business trends, existing order backlog, and visibility into customer demand, Advanced Drainage Systems reaffirmed its fiscal 2027 financial guidance.
The company expects net sales between $3.35 billion and $3.55 billion, while Adjusted EBITDA is projected to range from $1.0 billion to $1.05 billion. Capital expenditures for the fiscal year are expected to total approximately $200 million, reflecting continued investment in manufacturing capacity, operational efficiency, and future growth initiatives.
Positioned for Long-Term Growth
Founded in 1966, Advanced Drainage Systems has become one of North America’s leading providers of stormwater and onsite wastewater management solutions. Together with its subsidiaries NDS and Infiltrator Water Technologies, the company serves residential, commercial, agricultural, and infrastructure markets through an extensive manufacturing network, one of the industry’s largest company-owned transportation fleets, and a broad sales organization.
The company is also recognized as one of North America’s largest plastic recyclers, recycling millions of pounds of plastic annually to manufacture sustainable water management products.
With strong first-quarter financial performance, expanding product offerings, successful integration of NDS, and continued investment in innovation and sustainability, Advanced Drainage Systems appears well positioned to capitalize on long-term demand for efficient water infrastructure while maintaining disciplined financial performance throughout fiscal 2027.
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