Advanced Drainage Sales Accelerate as Margins Expand
Adjusted EBITDA climbed 28.8% to $358.3 million as profitability improved.
Advanced Drainage Systems (WMS), a stormwater and wastewater solutions provider, reported faster fiscal first-quarter growth as demand strengthened and margins widened.
Net sales rose 20.6% from a year earlier to $1.001 billion, accelerating from 9.9% growth in the preceding quarter. Organic growth quickened to 9.2% from 2.0%, while sequential sales increased from $676.8 million.
Net income from continuing operations increased 22.5% to $176.6 million, and diluted continuing-operations earnings rose 22.8% to $2.26 a share. Those gains reversed the preceding quarter's declines, when acquisition, restructuring and realignment costs weighed on results.
Stormwater sales climbed 24.2% to $809.4 million, compared with 11.7% growth in the preceding quarter. NDS contributed $94.7 million, up from $48.8 million in the acquisition-closing quarter, while Stormwater sales excluding NDS grew 9.7% organically. Wastewater sales rose 7.5% to $191.7 million, also accelerating from the prior quarter.
Nonresidential strength and customer purchases ahead of price increases supported volume. Favorable price-cost trends and manufacturing costs offset higher transportation expenses, helping adjusted EBITDA margin expand 230 basis points to 35.8% after contracting in the preceding quarter. Gross profit rose 23.5% to $408.0 million, outpacing sales growth.
Advanced Drainage reiterated fiscal 2027 guidance for net sales of $3.35 billion to $3.55 billion and adjusted EBITDA of $1.0 billion to $1.05 billion. The outlook includes capital spending of about $200 million and reflects continued caution about the demand environment.
Operating cash flow declined to $260.4 million from $275.0 million, and free cash flow fell to $203.2 million from $222.4 million. Advanced Drainage repurchased 1.6 million shares for $228.5 million, leaving $822.5 million under its authorization, and raised its quarterly dividend 11% to $0.20 a share.