WMS

The end of the earnings season is always a good time to take a step back and see who shined (and who didn’t). Let’s take a look at how HVAC and water systems stocks fared in Q2, starting with Advanced Drainage (NYSE:WMS). Many HVAC and water systems companies sell essential, non-discretionary infrastructure for buildings. Since the useful lives of these water heaters and vents are fairly standard, these companies have a portion of predictable replacement revenue. In the last decade, trends in energy efficiency and clean water are driving innovation that is leading to incremental demand. On the other hand, new installations for these companies are at the whim of residential and commercial construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. The 9 HVAC and water systems stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 4.7%. While some hvac and water systems stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.7% since the latest earnings results. Originally started as a farm water drainage company, Advanced Drainage Systems (NYSE:WMS) provides clean water management solutions to communities across America. Advanced Drainage reported revenues of $1.00 billion, up 20.6% year on year. This print exceeded analysts’ expectations by 2%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ EBITDA estimates and a beat of analysts’ EPS estimates. Advanced Drainage delivered the weakest full-year guidance update in the group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 2.1% since reporting and currently trades at $146.44. Is now the time to buy Advanced Drainage? Access our full analysis of the earnings results here, it’s free. Backed by two million square feet of lab testing space, AAON (NASDAQ:AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings. AAON reported revenues of $627 million, up 101% year on year, outperforming analysts’ expectations by 24.6%. The business had an incredible quarter with a beat of analysts’ EPS and EBITDA estimates. AAON delivered the biggest analyst estimate beat and fastest revenue growth of the whole group. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 14.3% since reporting. It currently trades at $81.25. Is now the time to buy AAON? Access our full analysis of the earnings results here, it’s free. Based in Texas and founded over a century ago, Lennox (NYSE:LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration (HVACR) goods. Lennox reported revenues of $1.55 billion, up 3% year on year, falling short of analysts’ expectations by 1%. It was a mixed quarter as it posted an impressive beat of analysts’ organic revenue estimates but full-year EPS guidance missing analysts’ expectations significantly. Lennox delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 22.9% since the results and currently trades at $419.38. Read our full analysis of Lennox’s results here. Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ:NWPX) is a manufacturer of pipeline systems for water infrastructure. Northwest Pipe reported revenues of $159.5 million, up 19.7% year on year. This number beat analysts’ expectations by 3.1%. It was a stunning quarter as it also logged a beat of analysts’ EPS estimates. The stock is down 9.5% since reporting and currently trades at $111.54. Read our full, actionable report on Northwest Pipe here, it’s free. Credited with the invention of the glass-lined water heater, A.O. Smith (NYSE:AOS) manufactures water heating and treatment products for various industries. A. O. Smith reported revenues of $1.00 billion, flat year on year. This print topped analysts’ expectations by 1.4%. Overall, it was a strong quarter as it also recorded a beat of analysts’ EPS estimates and full-year EPS guidance slightly topping analysts’ expectations. A. O. Smith had the slowest revenue growth among its peers. The stock is up 2.9% since reporting and currently trades at $63.86. Read our full, actionable report on A. O. Smith here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Advanced Drainage delivered quarterly results that exceeded Wall Street’s revenue and non-GAAP earnings expectations, supported by robust execution in both its Stormwater and Wastewater segments. Management credited the company’s performance to strong organic growth, the contribution from the NDS acquisition, and disciplined price management amid persistent cost inflation. CEO Scott Barbour highlighted the company’s diversified portfolio and material conversion initiatives as key factors, noting that “our diversified portfolio is working exactly as intended,” which helped offset weakness in certain residential markets. Is now the time to buy WMS? Find out in our full research report (it’s free). Revenue: $1.00 billion vs analyst estimates of $981.5 million (20.6% year-on-year growth, 2% beat) Adjusted EPS: $2.49 vs analyst estimates of $2.12 (17.4% beat) Adjusted EBITDA: $358.3 million vs analyst estimates of $313.3 million (35.8% margin, 14.3% beat) The company reconfirmed its revenue guidance for the full year of $3.45 billion at the midpoint EBITDA guidance for the full year is $1.03 billion at the midpoint, in line with analyst expectations Operating Margin: 25.4%, in line with the same quarter last year Market Capitalization: $10.6 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Matthew Bouley (Barclays) asked about the expected cadence of EBITDA margins given shifting input costs. CFO Scott Cottrill explained that margins will fall sequentially in the next quarter, primarily due to resin and freight cost headwinds. Michael Halloran (Baird) probed for details on NDS integration and near-term facility improvements. CEO Scott Barbour described several facility projects nearing completion and outlined a plan to focus on automation and working capital initiatives over the next year. John Lovallo (UBS) questioned when lower input costs might flow through to results. Cottrill responded that resin costs will remain elevated through Q2 and Q3, with some moderation possible by year-end, while transportation costs will stay high. Jeffrey Reive (RBC Capital Markets) asked whether second quarter margins could fall below 30% given cost pressures and prebuy dynamics. Cottrill acknowledged margins will compress more than usual, but did not commit to a specific threshold. Collin Verron (Deutsche Bank) inquired about the pace of increasing recycled content and regulatory barriers. Barbour said the company aims to reach 50% recycled content “as fast as we can,” acknowledging some market-specific limitations. In the coming quarters, the StockStory team will be watching (1) the impact of resin and freight cost inflation on margins, (2) the pace and effectiveness of NDS integration and cross-selling initiatives, and (3) progress in scaling the Cordele recycling facility and increasing recycled content usage. Execution on these fronts will be key to sustaining profitability and supporting long-term growth. Advanced Drainage currently trades at $140.46, down from $149.59 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 10 a.m. ET Vice President of Corporate Strategy and Investor Relations - Michael Higgins President and Chief Executive Officer - Scott Barbour Chief Financial Officer - Scott Cottrill President of Infiltrator - Craig Taylor Operator: Good morning, ladies and gentlemen, and welcome to Advanced Drainage Systems First Quarter of Fiscal Year 2027 Results Conference Call. My name is Caleb, and I'm your operator for today's call. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Mr. Mike Higgins, Vice President of Corporate Strategy and Investor Relations. Sir, you may begin. Michael Higgins: All right. Good morning, everyone. Thanks for joining us today. Here with me, I have Scott Barbour, our President and CEO; Scott Cottrill, our Chief Financial Officer; and Craig Taylor, President of Infiltrator. I would also like to remind you that we will discuss forward-looking statements. Actual results may differ materially from those forward-looking statements because of various factors, including those discussed in our press release and the risk factors identified in our Form 10-K filed with the SEC. While we may update forward-looking statements in the future, we disclaim any obligation to do so. You should not place undue reliance on these forward-looking statements, all of which speak only as of today. Lastly, the press release we issued earlier this morning is posted on the Investor Relations section of our website. A copy of the release has also been included in an 8-K submitted to the SEC. We will make a replay of this conference call available via webcast on the company website. With all of that said, I'll turn the call over to Scott Barbour. D. Barbour: Thank you, Mike, and good morning, everyone. Before I begin, I want to thank everyone who made the trip to Ohio for our Investor Day in June. It was a great opportunity to showcase our Engineering and Technology Center and highlight what makes ADS a unique and compelling investment opportunity. At Investor Day, we focused on 4 key themes that continue to guide our strategy. First, ADS is a pure-play water company, serving attractive end markets supported by powerful secular tailwinds, including aging and underbuilt infrastructure, more frequent and intense storm events and the growing need to protect and manage water, the world's most precious resource. Second, we highlighted our differentiated growth strategy. Material conversion remains an important driver and key component of our growth, and we continue to focus on innovation, new product introductions, strategic partnerships, distributor programs and disciplined acquisitions to further differentiate the company. Third, we built a resilient platform that delivers industry-leading profitability and strong cash generation across a variety of market conditions. And finally, we remain committed to disciplined capital allocation, reinvest in opportunities that strengthen our competitive advantages and create long-term shareholder value. Simply put, if we continue to grow faster than our markets, generate strong profitability and cash flow and reinvest that capital wisely, we believe that's a winning formula for ADS and our shareholders. Now shifting to the quarter. The first quarter results reflect strong performance as the team continued to execute well despite the tepid demand environment. For the first time ever, we recorded over $1 billion in revenue this quarter, an increase of 21% versus the prior year. Organic revenue increased 9%, driven by growth across both the Stormwater and Wastewater segments. Adjusted EBITDA increased 29% to $358 million, resulting in an adjusted EBITDA margin of 35.8%, which is among the most profitable quarters in our history. The impressive results reflect our diversified portfolio, disciplined management of price/cost, material conversion initiatives and operational execution that once again enabled us to deliver strong financial performance. The quarter developed largely as we anticipated when we entered the fiscal year, and the first half of the year is developing as expected. We estimate there was approximately $25 million to $30 million of revenue pulled into the first quarter from the second as customers try to get ahead of price increases. Ultimately, we expect the first half of the year to have normal seasonality, representing 55% to 60% of revenue. However, the normal first and second quarter revenue patterns will be affected by this pull-ahead. So if you take the $95 million of revenue from NDS and assume approximately $25 million to $30 million was pulled forward, we still reported strong mid-single-digit organic growth. Sales in the nonresidential market were strong, increasing 14% on an organic basis. Activity in commercial construction and large projects, including data centers and warehouses, remains resilient. Residential market sales increased 29%, primarily driven by NDS. Organic results in the residential market were flat overall. Infiltrator residential revenue increased double digits, driven by tanks and residential advanced treatment systems. On the Stormwater side, we saw weakness in both retail and residential land development. The challenges in residential construction are well documented as affordability pressures and elevated interest rates continue to weigh on homebuyers. Importantly, our diversified portfolio is working exactly as intended. While portions of the residential market remain under pressure, our geographic and end market diversification, new product introductions, distributor programs and product partnerships continue to provide additional growth opportunities to help offset this market weakness. I'd like to highlight the Stormwater storage category within our Allied Products, which grew 18% in the quarter and is an excellent example of when we do our strategies well. We continue to introduce new products in our core StormTech chambers product line, acquired CULTEC, a complementary chamber line, and we established a partnership to bring Aquabox plastic crates to market in the U.S. for applications with a tighter footprint. And we wrap that with industry-leading digital design tools that easily enable engineers to design and specify these storage products. Another great example of this is the Wastewater segment, where revenue increased 8%, significantly outperforming the underlying residential market. Growth was driven by new tank products and expanded distribution as well as growth in our market-leading advanced treatment products. We're very pleased with the performance of NDS. Their performance and the integration activities continue to progress well. We are increasingly excited about the long-term opportunities to cross-sell products, broaden customer relationships and expand participation in both irrigation and retail channels. NDS delivered another strong quarter and continues to validate the strategic rationale behind the acquisition. We continue to operate under the strategy of recovering inflationary costs on a dollar-for-dollar basis. Transportation costs remain significantly elevated driven by higher diesel and common carrier costs. The cost of materials procured in the quarter was significantly higher on a year-over-year basis, though the first quarter profitability reflects material procured in the prior year at a favorable cost. Another lever we use to offset higher material costs is increasing the use of recycled materials, a strategy we accelerated in late February as raw material costs began to rise and the spread between recycled and virgin material widened. Of note, the expansion of our Cordele, Georgia, recycling facility is nearing completion. This expansion significantly enhances both processing capacity and operational capability in a high-growth region, transforming the facility into a fully integrated recycling plant capable of producing finished materials. The design of this facility reduces material movement, streamlines production flow and enhances process control throughout the manufacturing cycle. Upon full ramp-up, we expect Cordele to be the benchmark for recycling performance within the ADS network. The facility will deliver industry-leading cost efficiency, improved quality and consistency and superior operational performance, strengthening our recycled material supply chain, supporting our long-term growth and margin improvement. Our operational initiatives continue to produce tangible results. Over the last several years, we have invested heavily in production efficiency, automation, logistics capabilities and service levels at both ADS and Infiltrator. Those investments continue to improve productivity, support customer service and strengthen our competitive position. The benefits of those actions remained evident in our profitability, cash generation and ability to serve customers across a broad range of end markets. Overall, we are pleased with the start to the fiscal year and believe our results reinforce the strength of the ADS business model. The long-term fundamentals supporting our business are stronger than ever. As we discussed at Investor Day, we are a pure-play water company operating in attractive markets, supported by powerful secular tailwinds and the growing need for advanced water management solutions. These trends continue to play directly to the strengths of our portfolio and position us for the long-term growth. Our differentiated growth strategy continues to set ADS apart. While material conversion is a core business driver, we are increasingly creating growth through innovation, new product introductions, strategic partnerships, expanded distribution programs and acquisitions. As we look ahead, our priorities are clear: execute against the initiatives within our control, advance the integration of NDS and continue to leverage our resilient platform to generate strong profitability and cash flow across a range of market conditions. We remain committed to disciplined capital allocation, reinvesting in opportunities that strengthen our competitive advantages, strategic acquisitions and return capital to shareholders through dividends and opportunistic share repurchases. While we expect the demand environment to remain tepid, the inflationary cost pressure is dynamic. We are confident in our team's strategy and ability to continue delivering profitable growth and sustained value for our shareholders. With that, I'll turn the call over to Scott Cottrill. Scott Cottrill: Thanks, Scott. Turning to the first quarter financial performance. Net sales increased 21% to $1 billion. Excluding the impact of NDS, organic sales increased 9%, and adjusting for the pull-ahead, revenue grew mid-single digits. That mix of growth is the ADS model at work. First, we grow faster than our end markets organically. And second, we leverage strategic acquisitions such as NDS to compound such growth. Stormwater revenue increased 24% to $809 million as compared to $652 million in the prior year. On an organic basis, Stormwater sales increased 10%, driven by growth in both pipe and Allied Products. Wastewater revenue increased 8%, driven by double-digit growth in both tanks and residential advanced treatment. Importantly, we continue to outperform our underlying end markets during the quarter, reflecting the benefits of our diversified product portfolio and our material conversion strategy. Adjusted EBITDA increased to $358 million, resulting in an adjusted EBITDA margin of 35.8% as compared to 33.5% in the prior year, an increase of 230 basis points and the second highest in the company's history. Several factors helped drive the strong performance during the quarter: strong organic volume growth, especially relative to our underlying markets; the contribution from the NDS business, which also grew year-over-year in a challenging market; the $25 million to $30 million pull-ahead from customers trying to buy ahead of price increases as well as good execution on our commercial strategies, including the timing benefit realized from implementing pricing actions ahead of higher material costs. Moving to cash flow. Free cash flow for the quarter totaled $203 million. Cash generation remains a core strength of the business and reflects both earnings performance and disciplined working capital management. We ended the quarter with net leverage of approximately 1.5x, below our target of 2x and had available liquidity of approximately $901 million. We expect to spend approximately $200 million in capital expenditures this fiscal year as we close out the Cordele expansion and invest in automation and additional capacity at our Infiltrator business. Our capital allocation priorities remain unchanged: invest organically in areas such as growth and new products, material science and blending capabilities as well as automation and productivity; pursue strategic acquisitions; and finally, returning excess capital to shareholders through our quarterly dividend and share repurchase authorization. We remain extremely well positioned financially and continue to maintain significant flexibility. Moving to guidance. We continue to expect net sales of $3.350 billion to $3.550 billion and adjusted EBITDA of $1 billion to $1.05 billion. While our first quarter performance was strong, we continue to operate in a challenging environment characterized by inflationary cost pressures and fluctuating raw material costs. From a market demand perspective, the nonresidential market is performing modestly better than we had anticipated, while our residential end market demand is performing modestly worse. As we look to the remainder of the year, we still expect normal first half to second half revenue patterns with 55% to 60% of revenue in the first half of the fiscal year. In addition, while material costs were a benefit in Q1, they will be a significant year-over-year headwind for the remainder of the year. We also expect the higher transportation costs we experienced in Q1 to remain significantly elevated throughout the remainder of the year. And finally, we continue to expect our pricing initiatives to offset inflationary cost pressure on a dollar-for-dollar basis for the full fiscal year. In summary, we delivered a strong start to fiscal 2027 through disciplined execution and effective price/cost management. We remain confident in our strategy, focusing on the 4 core themes that Scott initiated - or mentioned a minute ago. Our unique position as a pure-play water company serving markets supported by long-term secular demand drivers. Our differentiated growth strategy, where we continue to outperform our end markets through material conversion, innovation, strategic partnerships, expanded distribution and disciplined acquisitions. Our resilient platform, which enables us to deliver industry-leading profitability and strong cash generation across a variety of market conditions, as evidenced by our 35.8% EBITDA margin and $203 million of free cash flow we delivered this quarter. And finally, our disciplined approach to capital allocation, as we invest in the highest risk-adjusted return opportunities available to us while maintaining a strong balance sheet and creating long-term value for our shareholders. Taken together, these 4 pillars give us confidence in our ability to continue delivering profitable growth, strong cash flow generation and compelling shareholder returns over the long term. With that, operator, please open the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Matt Bouley with Barclays. Matthew Bouley: I'll start off with a question on the guide, picking off there where Scott C. finished. So you mentioned the cadence of revenues. My question is on the cadence of EBITDA. I think I heard you say that raws were a tailwind and they're going to become a headwind moving forward. So could price/cost actually become sort of temporarily negative as a result and kind of thinking about how that occurs and the timing of when price and cost would match? And so is there any kind of resulting cadence to the EBITDA -- EBITDA margin specifically that you can speak to? Scott Cottrill: Matt, it's Scott C. Yes, absolutely, you should think about it that way. So normally, based on seasonality, product mix, our Q2 is normally 300 basis points, EBITDA margin-wise, below Q1 on a sequential basis. I would expect this year to be worse than that. So that is exactly the right way to think about it. If you look at the EBITDA bridge that we had in the first quarter on a year-over-year basis, again, as we mentioned, you had favorability in that price/cost bar from both pricing and that FIFO roll of our inventory costs. So we still had favorable resin costs that we experienced on a year-over-year basis in the first quarter. That will flip on us as we go into Q2. We're still getting the pricing, and we'll still see that sequential. It's just going to be the cost side of the house. And as, like we said, that's the resin coming at us in Q2 that we didn't have in Q1, but we also have those transportation costs that were very much a headwind for us here in the first quarter, and they will remain that way as we go through the rest of the year. Matthew Bouley: Okay. Perfect. No, that color is exactly what I was looking for. And then secondly, NDS, you said $95 million of sales. I think I heard you say that maybe organically, they were up year-over-year. Question is, I mean, what does June quarter seasonality typically look like for them? Because $95 million would seem like it annualizes to a large number, but maybe this is typical of them. And obviously, what I'm getting at is you mentioned the organic growth. Are you seeing kind of early wins on cross-selling or revenue synergies? And just more broadly, how is that initial integration going? D. Barbour: So Matt, this is Scott B. Their highest quarter is the quarter we just completed. And we are still learning their seasonality, but we're obviously working with that team to kind of see what the patterns are. So you can't just annualize that quarter, although it was a good quarter for them. Their performance has been quite good. We are seeing some, I'd say, a lot of opportunities that we're working on the cross-selling. I don't think we're kind of generating tremendous amounts of revenue day in and day out on that, but we've definitely got them in sight and have people on the ground working those. And we have also had very good work with them on cost, cash flow, just kind of all the different things that you know well about our team here that we're working and they're right in there with us. And a very solid 2 days -- they were here over the Board meeting in the last couple of days, very solid 2 days with them on all these topics. So I would say, not yet, but their performance has given us every indication that those future activities like cross-selling are going to be winners for us. Operator: Your next question comes from the line of Mike Halloran with Baird. Michael Halloran: Why don't we start off where you left off there on the NDS piece? Maybe just kind of cadence, how you're thinking about what the steps look like in the short term on the any kind of facility work or restructuring work or internal improvement work that you're doing, both kind of this year and then into next year? And how those are going to start cadencing out for you? D. Barbour: So this is Scott B. Mike, there are, I would say, a couple of small facility types of things that are pretty much complete that are certainly additive to our synergy and integration activities right now. And some of that will be showing up in their profit statement going forward. The bigger one doesn't occur. It's more of a next year program that we will see the effects of that. That's a much bigger one that we're working on. And then I think right behind that, from a facilities kind of CapEx spending, we kind of get facility type stuff out of the way between now and the end of this calendar year. Once we get those behind us, we start to work on some automation things, which would be kind of conversion costs related. And then we have a very good program defined with them on working capital and cash. I mean those are really some big priorities with us right now, Mike, as well as setting up the cross-selling. I mean, to get that cross-selling going, you got to establish some back-office practices, you got to get people trained up, you got to get in front of customers. And that has all kind of occurred, and now we're doing some trial geographies at the beginning of this month. So I'd say our first 6 months with them starting in February been pretty busy. And it's good to, like I told them, I mean, you're off to a great start, and let's keep going. Michael Higgins: Yes, Mike, I think they benefited from kind of coming under the ADS umbrella and having more resources and some expertise at their disposal. So we've been able to maybe help them operate the business more effectively and efficiently than maybe it was in the past. D. Barbour: We clearly look at things differently than the prior. Michael Halloran: Yes. No, that makes sense. And then second question, I think, Scott C., you referenced nonres maybe tracking a little better than you thought. Maybe just talk about some of the reasons what you're seeing that support that regional subcategory, anything that you would highlight? D. Barbour: I would start with the Allied Products. Our Allied products, the storage products, which I kind of went a lot into there and the range of solutions that we have in our storage products today are really kind of just market-leading by far. And I think we're winning new business in that category. Our capture products, still, again, that Nyloplast product line, that Duraslot product line, sell well. We haven't even gotten to the really good cross-selling yet with the NDS products there. Our fittings had a good month -- I mean, a good quarter. That was pulled along with some of the buy-ahead and the pipe strength. Our water quality products, we continue to get new approvals in new jurisdictions. So I think we've said many times in the past that the Allied Products is very vectored to the nonres segment, and the strength of our portfolio there, the programs that we're running in that, I think, are just really winning. Data centers, warehouses, institution work, that all continues to go kind of well. It is not broad-based geographically. It is certain geographies that are doing well. And our quoting activity is good in this area, the nonresidential area. And so I think it's -- Mike, you add any color to that. Michael Higgins: No, I think you hit it. I mean I think when you look, when we look through kind of the subprojects under nonresidential, we saw pretty steady growth across just general purpose commercial. Warehouses have continued to kind of improve on a year-over-year basis, the data centers, institutional construction is usually pretty steady, and that's been good. And again, the programs, we have a very high focus with our sales force of selling the package and increasing what we call Allied Products attachment. I think we're seeing better performance there. And like Scott said, geographically, it's little kind of all over the place, but there's, when you think about kind of the West has some strength in certain states, Texas was good this quarter. The Northeast was pretty solid in some states. The Midwest had some positive ones. It's just a couple of places like California, Florida have been a little soft, right, on a year-over-year basis. But I think we definitely think we're outperforming the markets and doing well, and that's probably goal number one. Operator: Your next question comes from the line of John Lovallo with UBS. John Lovallo: I think in the past, you've talked about having 30 days of raw mats inventory, about 60 days of finished goods. With that in mind, I mean, resin costs certainly spiked earlier in the year, but they have come back in quite a bit over the past few months. And I think you've talked about input costs remaining elevated through the remainder of the year. But I guess I'm curious as to when you think the lower or the reduced input costs will start flowing through? I mean, is that more of a next year phenomenon? Or could that hit later in this fiscal year? Scott Cottrill: Yes. John, it's Scott C. here. You're correct. I think the peak on the resin side is definitely going to be Q2, Q3 based on what we know today and the procured and what we see on the balance sheet. So really good visibility there. It's still going to be elevated in Q4, but not at the level that we expect in Q2 and Q3. So that's number one. Transportation will be the next part of that conversation. But again, those rates and everything else we're seeing are going to be there. Now our internal fleet helps us hedge that, and 70%, 75% plus is done internally on our fleet, which is a great mitigation factor against that external CC and what we see going on there. But that's still going to remain elevated. It was elevated in the first quarter. As you can see in our EBITDA bridge, it's going to be that way through the rest of the year. D. Barbour: I want to add, this is Scott Barbour, John, one thing to that is, and you're correct, it spiked high, kind of came off a bit, but it is still significantly over where it was a year ago from -- to procure that material. So I just don't want to lose sight of that, that it's been very dynamic, but it's still above the prior year materials cost. It's still above the prior year on the transportation cost. John Lovallo: Got you. Okay. And then in terms of the $25 million to $30 million of sales that were pulled forward from the second quarter into the first quarter, how should we sort of think about the split between Stormwater and Wastewater? And then were there any end markets in particular where this is most pronounced? Scott Cottrill: I would say primarily Stormwater. Absolutely, there was a little bit in Wastewater as well. But I mean we saw it across the board. I mean the price increases, there were multiple in certain cases. We took it across the board, every business unit, both segments. So again, you'd see a little bit of that in each one of those. But on a dollar basis, primarily, you'd see the largest piece of that being in Stormwater. D. Barbour: I mean it's proportional. Michael Higgins: And from an end market, it's probably more nonresidential driven than residential or infrastructure. Operator: Your next question comes from the line of Bryan Blair with Oppenheimer. Bryan Blair: We know that your team has had to be pretty aggressive with price actions. I think you framed last quarter that most of it would hit in Q2. To level set, I was wondering if you'd be willing to disclose Q1 price and what you're contemplating for Q2 and back half price realization. D. Barbour: So it's kind of the sequential pattern of pricing. Scott Cottrill: Yes. So what I'd say is absolutely, we got the pricing into the market fast. We always talk about getting that into the market 30 to 45 days before the resin hits us. So success there. As we look at Q2 and we progress through the year, obviously, we're going to match those inflationary cost pressures on a dollar-for-dollar basis. So what you'll see in Q2 is largely kind of that pricing kind of remain at that level. And then as we go through the second half of the year, then we'll adjust accordingly based on what the inflationary cost pressures we have forecasted and what we're seeing. So again, Q2, we'll see the pricing that we got into the market in the first quarter continuing. Bryan Blair: Okay. Understood. I believe you mentioned that advanced treatment continued to grow double digits in the quarter. One, am I correct? Did I hear that correctly? And what kind of growth does your team anticipate from advanced treatment going forward? Obviously, you have pretty healthy comps that you face there. And I suppose the same question on engineered systems. That's smaller now, but it seems like a pretty compelling opportunity for your team, at least through more of like a medium-term lens. Just curious how impactful that may be to fiscal '27. Craig Taylor: Bryan, this is Craig. Yes, advanced treatment continues to be strong on the residential side for us. With the synergies between Orenco and Infiltrator, that's been an opportunity for us on the advanced treatment side. And then when it comes to Infiltrator, we launched a new product, which was our Edge product in the residential market, which was very healthy throughout the first quarter with that launch. So that continues to be strong for us in addressing the needs out in the market. And as we look forward, the engineered systems is an opportunity for us. As we look at that and serving the market as it moves forward, especially under the Orenco business, we combine that with the Infiltrator business to grow that segment. It's a small segment, but a segment that we're looking to grow as we move forward. D. Barbour: And investing in from both an organization and capacity, both Louisiana and in Oregon. So we like that market. You're right, Bryan. We like that market a lot. Operator: Your next question comes from the line of Jeff Hammond with KeyBanc Capital Markets Inc. Jeffrey Hammond: Just on the price, I think you said price is going to be similar 2Q versus 1Q. So I'm just trying to understand better why you had to pull-ahead if pricing was kind of already in because I was under the impression price would step up, but maybe just clarify. Scott Cottrill: Jeff, why don't you ask it again? What's the question? Jeffrey Hammond: Well, you're saying the pricing isn't going to step up in 2Q. So I'm just wondering why the early buy or prebuy... Scott Cottrill: It's because we had good visibility to what's coming at us. Again, we see the resin on our balance sheet. We also know what we're procuring at in April, May and June. So we had, in some cases, multiple price increases that went out. And again, we try to get in front of it. And again, we succeeded and got that in front of us. So we've got the pricing in place in anticipating of the costs that are coming at us. Those costs, again, based on our FIFO roll and how they come out of the balance sheet, are going to hit us. It's going to be Q2, Q3 as well as Q4, but the peak of it, like we just talked about, will be Q2 and Q3. And again, the pricing is in place. And so we've got it in place in advance. Are we going to go out with new price increases? No. But in certain geographies, products, if we need to, absolutely, we will. And we're also managing the transportation costs. So the takeaway is we got in front of it, right? And that's what we try to do. And then basically, now we're going to continue it as we go through the first half of the year. But in Q2, what's going to be different is we've got a lot more resin cost coming at us than we did in the first quarter. And that's, hence, the margin conversation, right? We typically have, based on product mix and seasonality, kind of a 300 kind of basis point degradation in sequential margins between Q1 and Q2. It will be a little bit worse than that this year based on the magnitude of those resin costs coming at us. And again, transportation costs will stay elevated at the rate they are. But again, we have a good forecasting S&OP process. We've got the pricing in place to offset those costs on a dollar-for-dollar basis. We just happen to get them into the market and start getting them earlier than the cost hit us. Jeffrey Hammond: Okay. That's helpful. Just, I'm trying to better understand maybe the outgrowth. You gave the growth rates like non-res, res, infrastructure, ag. I think that includes NDS and includes the pull forward. Is there a way to think about how those markets grew for you ex maybe the pull forward and ex NDS? D. Barbour: I think that's the... Scott Cottrill: Yes. So what we talked about, Jeff, was 21% at the total consolidated level, revenue up year-over-year. We talked about organically, excluding NDS, being up 9%. And then we talked about if you take the $25 million to $30 million of pull-ahead out, that 9% organic would have been more like mid-single digits, up. Now to give it to you by end market, I think Scott and Mike answered the question earlier, where a lot of that pull-ahead we saw was in the non-res side of the house. So that's the way I would look at it. D. Barbour: And I think it's proportional. Scott Cottrill: With a little bit in the resi side. D. Barbour: The Wastewater, I think it's proportionate. Operator: Your next question comes from the line of Trey Grooms with Stephens. Trey Grooms: Kind of just as a follow-on to the last one there as you guys were commenting the kind of the outperformance -- or market outperformance. It sounds like it's a lot of that's kind of non-res related. As we look in the back half and you kind of look at kind of the, I don't know if you want to call it, backlog of activity out there on nonres, is it still your thought that you should kind of continue to outpace at a similar kind of rate as what we saw in the first quarter or anything to call out there? Michael Higgins: Yes, Trey, Mike here. I think we'll still continue to outperform the market, but to say that we're going to continue to be kind of up 18%, 19% is a little bit of a stretch. But I think we'll continue to see growth. Maybe it's kind of closer to like kind of what we said, like kind of mid-single digit. Scott Cottrill: More like last year. Michael Higgins: Yes, more like last year. That's kind of what we expect for the year to unfold. But yes, we don't really see any kind of significant weakening in demand from where we are today. There's a little bit of benefit of the pull-ahead. You got some pricing that's come through there. So that's goosed that number a little bit. But we did see kind of mid-single-digit volume growth in the nonresidential end market. So we would expect that to kind of hold in there, right? Trey Grooms: Yes. That was the number I was referring to is the mid-single digit kind of stripping out all the other. That makes sense. And then, so understanding we're in an inflationary environment, but free cash flow should still be good this year. CapEx still looks like it's going to be down year-over-year despite some of these internal kind of growth projects that you have. You've got NDS integration underway. You bought back a pretty good slug of stock in the quarter. So how are you balancing buyback with any potential M&A in this environment? And as you're integrating the large NDS acquisition that we keep that in mind. Just curious update on your appetite for M&A versus buyback here given the cash flow backdrop. D. Barbour: It was a big slug of stock we bought back. And -- but there was severe dislocation during the quarter and volatility during the quarter. So as you guys all know, we buy against the grid. We will continue to work that same strategy. We continue to look at opportunities. We're 1.5x levered. Even though we bought back all that stock, we spent a fair amount of capital. I think it was $57 million worth of capital. We'll spend all that capital this year on Craig's business, completing the Building 7 expansion, doing a couple of NDS things. We've got Cordele complete -- which is largely complete. But we feel like we have the capacity to continue to look at things, and we'll do that. So I wouldn't say we're standing on the sidelines, Trey. How is that? Scott Cottrill: Yes. I mean what I'd add to Scott's point, like we talked about at Investor Day, highest risk-adjusted return opportunities. So again, we continue to look organically to all the items that Scott mentioned as kind of our highest return, lowest risk use of capital. Acquisitions followed close therein. It's great. We've got a very robust process and always looking at the funnel. It also comes down to some actionability as well within there. But we'll always look at strategic first, and then financial has to obviously be there for us to move forward. But we're 1.5x levered. Our target is 2x leverage, right? So we've got plenty of firepower, capability, capacity and flexibility. And again, when it makes sense and we have dislocation and we're sub-2x levered, that excess cash. If there's nothing actionable within the strategic acquisition funnel, then absolutely, we'll buy back shares like we did in the first quarter. D. Barbour: I mean, it's a big number, almost $250 million, including the dividend return to shareholders in the first quarter. Scott Cottrill: Yes, 1.5 million shares. D. Barbour: Were repurchased. Operator: Your next question comes from the line of Jeffrey Reive, RBC Capital Markets. Jeffrey Reive: Just with the $25 million to $30 million prebuy headwind baked into the second quarter and peak material inflation in the quarter 2, is there a scenario where the second quarter margins compressed below 30%? Or do you think you have enough offsets in place to hold that line? Scott Cottrill: Yes. Like we said earlier, definitely, the way I like talking about it is our sequential margin performance, again, based on product mix, seasonality, typically, we see around a 300 bps degradation in our margins between Q2 and Q1 sequentially. Based on the resin that we expect to come at us, it will be more exasperated or a greater spread sequentially than 300 bps. So that is the way to look at it. Jeffrey Reive: Okay. Got it. And then now that your new recycling facility in Georgia is operational, can you give us a sense of maybe throughput, how it's tracking relative to capacity, how quickly it's contributing to your recycled resin mix? And is the facility ramping fast enough to provide that meaningful offset to inflation next quarter? Or is that more of a second half story? D. Barbour: The answer to your last kind of question is yes. It is contributing to mitigation of material costs already. It is ramping up now. So we're not at full production. That will take several months to do. I was down there a couple of weeks ago. We have nice supply coming in there. All the equipment is up and running. The blending is up and running. We're filling silos. We're waiting for our railcar spur to be approved and activated. It's all kind of installed. Team is fired up, as always, down there. But the bottom line is it meaningfully will contribute to our material cost mitigation strategies this year. It will not be at full capacity yet this fiscal year, but we'll reach full capacity next year. But I can tell you, no one is going to work harder to get there faster than Bobby and his team down there. We're really proud of what they're doing. Operator: [Operator Instructions] Your next question comes from the line of Collin Verron with Deutsche Bank. Collin Verron: I just want to follow up on the recycling. I know you called out that you were already increasing your recycled content in February. I guess, can you get back to sort of 50% recycled content in fiscal year '27? I know it was pretty low last year. Or are there any limitations within the year that might keep you below that? And then longer term, I guess, is there upside to sort of the 50% recycled content range? D. Barbour: So Scott Barbour here. Yes, on high-density polyethylene, we are pivoting to get to 50% recycled again or as kind of as fast as we can go. There's an upper limit on what we can do because some of our products require virgin, particularly for public jobs. So yes, we pivoted fast. That team has done a great job of procuring material, putting it through our other 2, Clarion and Pandora, facilities that were up and running. Our production was up in that in the quarter. Our usage was up in the quarter. Cordele contributed a little bit. It will continue to contribute more and more. What is the top of that number? I really don't want to kind of go down that path. But there are some limitations on -- by regulatory limitations for certain markets and applications in some states, not all states. But we continue to work that. And that is driven by your ability to come up with the right blends from an engineering standpoint. We showed you the capabilities we have to do that on Investor Day through our Engineering and Technology Center, really those first 2 labs that you toured, the analytics lab and then the blending lab there. And it is how much source of supply can you find on that. And we actually have capabilities and nicely demonstrated in both of those. And then how can you ramp those facilities like a Cordele? Cordele will have a lot more capacity than Pandora and Clarion. And then how does that kind of roll out the demonstrated technologies and capabilities we see at Cordele, how do you back flush that into these other facilities? That's kind of the long-range thing, but material science and finding sources of supply and having the right capacity, that's the formula. Michael Higgins: Yes, Collin, Mike Higgins. I mean, just for context on timing, right? It took us 10 years to get to 50%, right? So again, we've talked about this a lot. When you incorporate recycled materials, you need to maintain the same quality and performance you get with virgin materials. These are in critical applications. They're going under pavement. They need to perform. And maybe to add to what Scott is saying is we'll work things on the high-density polyethylene side, but also, too, our 2 fastest-growing products are the HP Pipe and StormTech chambers, which are virgin polypropylene. So very hard at work at finding ways to incorporate recycled materials or other type of additives to reduce that virgin content there. But again, first and foremost, maintaining the same quality and performance. Collin Verron: That's really helpful color. And I guess just on the transportation inflation, any color as to like how much of the inflation you're expecting is from diesel prices versus inflation and maybe third-party freight rates? And can you benefit from like a pivot back towards WMS-owned freight? And any sense of how much of a help that could be would be helpful. Scott Cottrill: Sure. I think on the logistics side of the house, again, we have an economic radius that it makes total economic sense to use our fleet. Anything that's going out past that economic radius, common carrier can be more efficient and effective to use. Diesel absolutely is part of our cost that we need to manage. But the internal fleet cost is well below what we see on the common carrier side, especially when we're dealing within that economic radius, which is the predominant percentage of what we do. So again, we manage the diesel. We do have a diesel hedging program. So we do hedge our diesel exposure. We also hedge it via using our internal fleet because of the lower cost structure that we have there versus the CC side of the house. And like I said, we try to target something greater than 70%, 75% of our shipments going out on the internal fleet. So those are all kind of the mitigations that we'll continue to do. And that route planning and the technology that the guys have there and how we're getting better at how we do our route planning, how we do our loading as well, a lot of investment we've had in there to improve our customer service, but as well as to lower our cost to serve in those markets when it deals, again, with loads and route planning. A lot of opportunity there, and they're already starting to get it. D. Barbour: The inflationary effects that we've had this year are kind of masking a lot of really good work we've done there to become more efficient in both our fleet and kind of our mode selections. Operator: Your next question comes from the line of James Ko with Jefferies. Jae Hyun Ko: I wanted to touch on the price/cost dynamic here a little bit again. What specific resin price assumption are you kind of using in your full year guidance? And has that assumptions like changed like relative to what you kind of embedded when you initially set the like 2027 guidance back in May? And what could kind of present upside versus downside here? Scott Cottrill: Yes. We're constantly monitoring that. And there's other mitigation as well as to the procured cost of it. Scott hit on it earlier, it's using recycled and everything else that we're doing there. So yes, I mean, what we're seeing coming at us is kind of what we thought was going to be the higher for longer for the entire year on a procured basis. Pretty much what was -- what we've talked to is the fact that, yes, we're going to have the peak of that resin that we procured pretty much in April, May and June coming through at us here in the next couple of quarters. And then again, we expected that higher rate that we are procuring at to stay there through the remainder of the year, but it has come off. So again, that is reflected in how we look at our guidance, the performance in the first quarter and also how we look at our pricing and our return model. So again, very dynamic, very fluid, but we have a very robust and mature model that we use to project that and stay in front of it. Jae Hyun Ko: Got it. And I guess touching on the pricing here a little bit. How much of your current pricing is locked in like through like formal contracts or purchase orders versus like negotiated kind of on spot? I'm just trying to understand the risk of like price give back if costs normalize. Yes, any color here would be helpful. Scott Cottrill: Our pricing is largely project-based pricing. So you could have between quote to order something like 60 to 90 days kind of lead time, and our quotes are good for 30 days. So that's the way I would think about it. But it's project-based pricing. So we have a lot of flexibility, a lot of ability to adjust or toggle through. D. Barbour: Go ahead, Craig. Craig Taylor: And for -- this is Craig. And for our business, I mean, that's something that's locked in. It's what we sell to our distributors, and that pricing holds on that... D. Barbour: Through list price. Craig Taylor: That is list price. Operator: There are no further questions at this time. I will now turn the call back to Mr. Scott Barbour for closing remarks. D. Barbour: All right. Thank you very much, everyone. Lots of good questions today. We anticipated a lot of price/cost questions today. So thanks for those. I'm pleased with the quarter. It's going to be dynamic as we kind of go through this first half and then the second half. And I think you guys hit on all of the different moving pieces that we're working on, between the resins and the cost mitigations, to recycle, the transportation costs, which are a significant rise, how we're reacting to that across the board with all of our product lines in the market. But like I said at the beginning, I mean, the fundamentals are strong. We like where we're at so far in the year, and we'll continue to kind of work towards that guidance. Thank you. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Advanced Drainage Systems, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Drainage Systems wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $400,209!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,375,393!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 13, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Advanced Drainage Systems. The Motley Fool has a disclosure policy. ADS (WMS) Q1 2027 Earnings Call Transcript was originally published by The Motley Fool

Interested in Advanced Drainage Systems, Inc.? Here are five stocks we like better. 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. → No Hangover: Revisiting Microsoft One Week After Earnings 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. → MarketBeat Week in Review – 08/03 - 08/07 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. → Why the Landlord of the AI Boom Could Outlast the Chipmakers 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 substantial revenue from those efforts. The company has begun trial programs in certain geographies after completing training, customer-facing work and back-office preparations. Barbour also said some smaller facility-related integration efforts are substantially complete, while a larger facility program is expected to affect results next year. Advanced Drainage Systems is also expanding its use of recycled materials as virgin raw-material costs rise. Its Cordele, Georgia, recycling facility expansion is nearing completion and has begun contributing to material-cost mitigation, Barbour said. The site is not expected to reach full capacity during fiscal 2027, with full capacity expected next year. The Cordele project is designed to increase processing capacity and create a fully integrated recycling operation capable of producing finished materials. Management said the company is working to return high-density polyethylene recycled content to 50% as quickly as possible, although some product applications and public-project requirements require virgin materials. The company maintained its fiscal 2027 outlook for net sales of $3.35 billion to $3.55 billion and adjusted EBITDA of $1 billion to $1.05 billion. It continues to expect 55% to 60% of annual revenue to occur in the first half, though the first- and second-quarter revenue pattern will be affected by the customer pull-forward. Cottrill said non-residential demand has been modestly better than anticipated, while residential demand has been modestly worse. The company expects to continue outperforming its markets, but management indicated that growth rates should be closer to mid-single digits over the full year rather than the elevated first-quarter levels. Material costs benefited first-quarter profitability because the company used inventory purchased at more favorable costs in the prior year. Cottrill said resin costs are expected to become a significant year-over-year headwind in the remainder of the fiscal year, peaking in the second and third quarters based on current procurement visibility. Transportation costs, including diesel and common-carrier expenses, are also expected to remain elevated. As a result, management expects second-quarter EBITDA margin to decline by more than its typical sequential 300-basis-point reduction from the first quarter, reflecting product mix, seasonality and higher resin costs. The company said it expects pricing actions to offset inflationary pressures on a dollar-for-dollar basis for the full year. Free cash flow totaled $203 million in the first quarter. The company ended the period with net leverage of about 1.5 times and approximately $901 million of available liquidity. Advanced Drainage Systems expects about $200 million of capital expenditures in fiscal 2027, including completion of the Cordele expansion, automation investments and added capacity at Infiltrator. Management said it repurchased $57 million of stock during the quarter and returned nearly $250 million to shareholders when including dividends. The company said it will continue to prioritize organic investment and strategic acquisitions, while using dividends and opportunistic repurchases to return excess capital to shareholders. Advanced Drainage Systems, Inc (NYSE: WMS) is a leading manufacturer and supplier of water management solutions in North America. Headquartered in Hilliard, Ohio, the company specializes in the design, production and distribution of high-density polyethylene (HDPE) drainage pipe and related products. Its core business addresses stormwater management, on-site septic systems and erosion control for residential, commercial and infrastructure projects. The company's product portfolio includes corrugated plastic pipe, tubing, fittings, geocells, geogrids and stormwater structures such as inlets, manholes and detention/retention systems. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Advanced Drainage Systems Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE. Advanced Drainage Systems (WMS) drew investor attention on 6 August 2026 after reporting first quarter results, a higher quarterly dividend, and updates on share repurchases and fiscal 2027 sales guidance. See our latest analysis for Advanced Drainage Systems. Against this backdrop of higher dividends, earnings and buybacks, Advanced Drainage Systems has had mixed recent momentum, with the share price down 0.8% year to date but a 1 year total shareholder return of 11.7%. If you are assessing how other infrastructure linked companies are trading, it can be useful to widen your view and review 37 power grid technology and infrastructure stocks After this mix of dividend growth, buybacks and a strong quarter, the bigger consideration is timing. Does it make more sense to add Advanced Drainage Systems after this move, or to wait for a different entry point as valuation comes into focus next? The most followed narrative currently places Advanced Drainage Systems' fair value at $181.20 compared with the last close at $148.45, which points to a valuation gap investors are watching closely. Read the complete narrative. Want to see what justifies an $181.20 fair value for Advanced Drainage Systems at an 8.9% discount rate? The narrative leans on compounding earnings, expanding margins and a richer profit multiple usually reserved for faster growing sectors. Curious which specific growth and margin paths have been stitched together to reach that target. Result: Fair Value of $181.20 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, the Advanced Drainage Systems narrative could shift quickly if resin and other input costs rise again, or if construction and infrastructure demand stays weaker for longer. Find out about the key risks to this Advanced Drainage Systems narrative. The fair value narrative suggests Advanced Drainage Systems is trading below an $181.20 estimate. The market is less generous on a simple P/E basis. The stock trades on 26.6x earnings, which is higher than the US Building industry at 24x, yet close to a fair ratio of 27.6x. That points to less obvious upside and more sensitivity to any earnings disappointment. Is this a margin of safety you are comfortable with, or is the room for error too thin? See what the numbers say about this price — find out in our valuation breakdown. This mix of optimism and caution around Advanced Drainage Systems might feel finely balanced. Check the data yourself, weigh the trade offs and review the 3 key rewards and 1 important warning sign If you stop with Advanced Drainage Systems, you miss a wider set of opportunities. Put these screeners to work and let the data surface fresh ideas for you. Target potential value opportunities early by checking stocks highlighted in the 50 high quality undervalued stocks before others catch on. Prioritise resilience by scanning companies in the 77 resilient stocks with low risk scores that score well on stability and risk controls. Hunt for lesser known opportunities by reviewing the screener containing 18 high quality undiscovered gems that combine quality fundamentals with limited current attention. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include WMS. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Net sales increased 20.6% to $1.0 billion Organic net sales increased 9.2% Net income from continuing operations increased 22.5% Adjusted EBITDA (Non-GAAP) increased 28.8% Diluted EPS from continuing operations increased 22.8% Repurchased $228.5 million of common stock HILLIARD, Ohio, August 06, 2026--(BUSINESS WIRE)--Advanced Drainage Systems, Inc. (NYSE: WMS) ("ADS" or the "Company"), a leading provider of innovative water management solutions in the stormwater and onsite wastewater industries today announced financial results for the fiscal first quarter ended June 30, 2026. Scott Barbour, President and Chief Executive Officer of ADS commented, "Performance for the first quarter of fiscal 2027 unfolded largely as we anticipated, with net sales increasing 21% to $1.0 billion and Adjusted EBITDA increasing 29% to $358.3 million, expanding our Adjusted EBITDA margin 230 basis points to 35.8%. These results reflect some pull-forward of sales from the second quarter ahead of price actions in addition to the ongoing strength and resilience of our diversified water management platform, strong organic growth, and a meaningful contribution from NDS, which we acquired in February. Domestic construction market sales increased 20%, with growth across all product categories and end markets. Several factors impacted the results this quarter, including price increases to cover inflationary cost pressure on transportation and materials impacting order patterns and normal seasonality." "Importantly, favorable volume was driven by strength in the non-residential market and customer purchases ahead of pricing actions. This demand, combined with disciplined price/cost management, drove margin expansion across both our Stormwater and Wastewater segments. NDS continues to perform well, expanding our reach in residential stormwater management and landscape irrigation while accelerating growth in Allied Products. Importantly, we continue to successfully sell the full solutions package, leveraging Allied Products alongside our core offerings to deliver greater value to customers and drive share gains." "We are pleased with the strong start to the year; however, we remain cautious on the overall demand environment. Broadly speaking, demand trends look similar to last year, with a number of moving pieces beneath the surface across end markets and geographies. That said, we remain confident in our position as a pure-play water company, supported by favorable long-term secular tailwinds, our differentiated growth strategy, a resilient operating platform, and disciplined capital allocation." First Quarter Fiscal 2027 Results Net sales increased $171.2 million, or 20.6%, to $1,001.1 million, as compared to $829.9 million in the prior year quarter. Stormwater sales increased $157.8 million, or 24.2%, to $809.4 million, as compared to $651.5 million in the prior year quarter. Stormwater sales include $94.7 million of revenue from the acquisition of National Diversified Sales ("NDS"). On an organic basis, stormwater sales increased 9.7%, driven by growth in both pipe and allied products. Wastewater sales increased $13.4 million, or 7.5%, to $191.7 million as compared to $178.4 million in the prior year quarter. Gross profit increased $77.6 million, or 23.5%, to $408.0 million as compared to $330.4 million in the prior year. The increase in gross profit is primarily driven by the acquisition of NDS, volume growth, and favorable price/cost and manufacturing costs, partially offset by higher transportation costs. Selling, general and administrative expenses increased $26.9 million, or 25.8% to $130.8 million, as compared to $104.0 million. As a percentage of sales, selling, general and administrative expense was 13.1% as compared to 12.5% in the prior year. The increase was primarily driven by the acquisition of NDS. Net income from continuing operations increased $32.5 million, or 22.5%, to $176.6 million as compared to $144.1 million in the prior year. Diluted Earnings Per Share ("EPS") From Continuing Operations increased $0.42, or 22.8%, to $2.26 as compared to $1.84 in the prior year quarter. Adjusted EBITDA (Non-GAAP) increased $80.1 million, or 28.8%, to $358.3 million, as compared to $278.2 million in the prior year, primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 35.8% as compared to 33.5% in the prior year. Segment sales results are based on Net sales to external customers. Reconciliations of GAAP to Non-GAAP financial measures for Adjusted EBITDA, Organic Net Sales, Free Cash Flow and Adjusted Earnings per Share have been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures." Balance Sheet and Liquidity Net cash provided by operating activities was $260.4 million, as compared to $275.0 million in the prior year. Free cash flow (Non-GAAP) was $203.2 million, as compared to $222.4 million in the prior year. Net debt (total debt and finance lease obligations net of cash) was $1,603.4 million as of June 30, 2026, an increase of $54.5 million from March 31, 2026. ADS had total liquidity of $900.9 million, comprised of cash of $162.3 million as of June 30, 2026 and $738.6 million of availability under committed credit facilities. As of June 30, 2026, the Company’s trailing-twelve-month leverage ratio was 1.5 times Adjusted EBITDA. In the three months ended June 30, 2026, the Company repurchased 1.6 million shares of its common stock for a total cost of $228.5 million. As of June 30, 2026, approximately $822.5 million of common stock may be repurchased under the Company's existing stock repurchase authorization. Fiscal 2027 Outlook Based on results to date, current visibility, backlog of existing orders and business trends, the Company confirmed its financial targets for fiscal 2027. Net sales are expected to be in the range of $3.350 billion to $3.550 billion and Adjusted EBITDA is expected to be in the range of $1.0 billion to $1.050 billion. Capital expenditures are expected to be approximately $200 million. Conference Call Information Interested investors and other parties can listen to a webcast of the live conference call by logging in through the Investor Relations section of the Company's website at https://investors.ads-pipe.com/events-and-presentations. An online replay will be available on the same website following the call. About the Company Advanced Drainage Systems is a leading manufacturer of innovative stormwater and onsite wastewater solutions that manage the world’s most precious resource: water. ADS, along with NDS and Infiltrator Water Technologies, provides superior stormwater drainage and onsite wastewater products used across commercial, residential, infrastructure, and agricultural applications, while delivering unparalleled customer service. ADS operates the industry’s largest company-owned fleet, an expansive sales team and a vast manufacturing network. As one of the largest plastic recycling companies in North America, ADS keeps millions of pounds of plastic out of landfills each year. Founded in 1966, ADS’ water management solutions are designed to last for decades. To learn more, visit the Company’s website at www.adspipe.com. Forward-Looking Statements Certain statements in this press release may be deemed to be forward-looking statements. These statements are not historical facts but rather are based on the Company’s current expectations, estimates and projections regarding the Company’s business, operations and other factors relating thereto. Words such as "may," "will," "could," "would," "should," "anticipate," "predict," "potential," "continue," "expects," "intends," "plans," "projects," "believes," "estimates," "confident" and similar expressions are used to identify these forward-looking statements. Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include: fluctuations in the price and availability of resins and other raw materials, new tariff and international trade policies, and our ability to pass any increased costs of raw materials and tariffs on to our customers in a timely manner; disruption or volatility in general business, political and economic conditions in the markets in which we operate; cyclicality and seasonality of the non-residential and residential construction markets and infrastructure spending; the risks of increasing competition in our existing and future markets; uncertainties surrounding the integration and realization of anticipated benefits of acquisitions or doing so within the intended timeframe, including our ability to successfully integrate NDS into our business; risks that the acquisition of NDS may involve unexpected costs, liabilities, risks that the cost savings and synergies from the acquisition of NDS may not be fully realized; the effect of any claims, litigation, investigations or proceedings; the effect of weather or seasonality; the loss of any of our significant customers; the risks of doing business internationally; the risks of conducting a portion of our operations through joint ventures; our ability to expand into new geographic or product markets; the risk associated with manufacturing processes; the effects of global climate change and any related regulatory responses; our ability to protect against cybersecurity incidents and disruptions or failures of our IT systems; our ability to assess and monitor the effects of artificial intelligence, machine learning, robotics and blockchain or other new approaches to data mining on our business and operations; our ability to manage our supply purchasing and customer credit policies; our ability to control labor costs and to attract, train and retain highly qualified employees and key personnel; our ability to protect our intellectual property rights; changes in laws and regulations, including environmental laws and regulations; our ability to appropriately address any environmental, social or governance concerns that may arise from our activities; the risks associated with our current levels of indebtedness, including borrowings under our existing credit agreement and outstanding indebtedness under our existing senior notes; and other risks and uncertainties described in the Company’s filings with the SEC. New risks and uncertainties emerge from time to time and it is not possible for the Company to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this press release. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the Company’s expectations, objectives or plans will be achieved in the timeframe anticipated or at all. Investors are cautioned not to place undue reliance on the Company’s forward-looking statements and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Financial Statements Non-GAAP Financial Measures This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). ADS management uses non-GAAP measures in its analysis of the Company’s performance. Investors are encouraged to review the reconciliation of non-GAAP financial measures to the comparable GAAP results available in the accompanying tables. This press release includes references to Adjusted EBITDA, Free Cash Flow, Organic Net Sales and Adjusted Earnings per Share, non-GAAP financial measures. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These measures are not intended to be substitutes for those reported in accordance with GAAP and may be different from non-GAAP financial measures used by other companies, even when similar terms are used to identify such measures. The following tables present reconciliations of non-GAAP financial measures to the most comparable GAAP measures for the periods indicated. Reconciliation of Segment Adjusted EBITDA to Net Income From Continuing Operations View source version on businesswire.com: https://www.businesswire.com/news/home/20260806423846/en/ Contacts For more information, please contact: Michael HigginsVP, Corporate Strategy & Investor Relations(614) [email protected]

HILLIARD, Ohio, August 06, 2026--(BUSINESS WIRE)--Advanced Drainage Systems, Inc. (NYSE: WMS) ("ADS" or the "Company"), a leading provider of innovative water management solutions in the stormwater and onsite wastewater industries, today announced that its Board of Directors (the "Board") has approved a quarterly cash dividend to its shareholders in the amount of $0.20 per share, a 11% increase over the prior year dividend amount. Scott Barbour, President and Chief Executive Officer of Advanced Drainage Systems commented, "Today’s dividend announcement, is predicated on the strength of our balance sheet, formidable cash generation, and ongoing commitment to returning capital to shareholders. Our strong financial performance and operational excellence initiatives provide us with the confidence and financial flexibility to return excess cash to our shareholders while simultaneously continuing to strategically invest in our business." The quarterly cash dividend of $0.20 per share will be paid on September 15, 2026, to shareholders of record at the close of business on September 1, 2026. About the CompanyAdvanced Drainage Systems is a leading manufacturer of innovative stormwater and onsite wastewater solutions that manage the world’s most precious resource: water. ADS, along with NDS and Infiltrator Water Technologies, provides superior stormwater drainage and onsite wastewater products used across commercial, residential, infrastructure, and agricultural applications, while delivering unparalleled customer service. ADS operates the industry’s largest company-owned fleet, an expansive sales team and a vast manufacturing network. As one of the largest plastic recycling companies in North America, ADS keeps millions of pounds of plastic out of landfills each year. Founded in 1966, ADS’ water management solutions are designed to last for decades. To learn more, visit the Company’s website at www.adspipe.com. Forward Looking StatementsCertain statements in this press release may be deemed to be forward-looking statements. These statements are not historical facts but rather are based on the Company’s current expectations, estimates and projections regarding the Company’s business, operations and other factors relating thereto. Words such as "may," "will," "could," "would," "should," "anticipate," "predict," "potential," "continue," "expects," "intends," "plans," "projects," "believes," "estimates," "confident" and similar expressions are used to identify these forward-looking statements. Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include: fluctuations in the price and availability of resins and other raw materials, new tariff and international trade policies, and our ability to pass any increased costs of raw materials and tariffs on to our customers in a timely manner; disruption or volatility in general business, political and economic conditions in the markets in which we operate; cyclicality and seasonality of the non-residential and residential construction markets and infrastructure spending; the risks of increasing competition in our existing and future markets; uncertainties surrounding the integration and realization of anticipated benefits of acquisitions or doing so within the intended timeframe, including our ability to successfully integrate NDS into our business; risks that the acquisition of NDS may involve unexpected costs, liabilities, risks that the cost savings and synergies from the acquisition of NDS may not be fully realized; the effect of any claims, litigation, investigations or proceedings; the effect of weather or seasonality; the loss of any of our significant customers; the risks of doing business internationally; the risks of conducting a portion of our operations through joint ventures; our ability to expand into new geographic or product markets; the risk associated with manufacturing processes; the effects of global climate change and any related regulatory responses; our ability to protect against cybersecurity incidents and disruptions or failures of our IT systems; our ability to assess and monitor the effects of artificial intelligence, machine learning, robotics and blockchain or other new approaches to data mining on our business and operations; our ability to manage our supply purchasing and customer credit policies; our ability to control labor costs and to attract, train and retain highly qualified employees and key personnel; our ability to protect our intellectual property rights; changes in laws and regulations, including environmental laws and regulations; our ability to appropriately address any environmental, social or governance concerns that may arise from our activities; the risks associated with our current levels of indebtedness, including borrowings under our existing credit agreement and outstanding indebtedness under our existing senior notes; and other risks and uncertainties described in the Company’s filings with the SEC. New risks and uncertainties emerge from time to time and it is not possible for the Company to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this press release. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the Company’s expectations, objectives or plans will be achieved in the timeframe anticipated or at all. Investors are cautioned not to place undue reliance on the Company’s forward-looking statements and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. View source version on businesswire.com: https://www.businesswire.com/news/home/20260806613909/en/ Contacts For more information, please contact: Michael HigginsVP, Corporate Strategy & Investor Relations(614) [email protected]

Advanced Drainage Systems (WMS) came out with quarterly earnings of $2.49 per share, beating the Zacks Consensus Estimate of $2.19 per share. This compares to earnings of $1.95 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +13.70%. A quarter ago, it was expected that this maker of water drainage systems and pipes would post earnings of $1 per share when it actually produced earnings of $1.07, delivering a surprise of +7%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Advanced Drainage, which belongs to the Zacks Building Products - Miscellaneous industry, posted revenues of $1 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 2.48%. This compares to year-ago revenues of $829.88 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Advanced Drainage shares have added about 3.3% since the beginning of the year versus the S&P 500's gain of 12.8%. While Advanced Drainage has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Advanced Drainage was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.94 on $942.69 million in revenues for the coming quarter and $6.55 on $3.45 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Building Products - Miscellaneous is currently in the top 44% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Janus International Group, Inc. (JBI), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 11. This company is expected to post quarterly earnings of $0.13 per share in its upcoming report, which represents a year-over-year change of -35%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Janus International Group, Inc.'s revenues are expected to be $235.9 million, up 3.4% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Advanced Drainage Systems, Inc. (WMS) : Free Stock Analysis Report Janus International Group, Inc. (JBI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research