Advanced Drainage Updates Fiscal 2027 Sales After Demand Pull-Forward

The Tip Desk · November 5, 2026 · 3 min read

Second-quarter net sales were $889.4 million as the company updated its full-year sales outlook to $3.300 billion–$3.400 billion.

Advanced Drainage Systems, Inc. (WMS) reported fiscal second-quarter net sales of $889.4 million, up 4.6% from $850.4 million a year earlier, after a 20.6% year-over-year increase to $1.0 billion in the first quarter. The water-management maker said second-quarter revenue was impacted by a larger-than-previously-estimated pull-forward of sales into the first quarter.

Organic net sales were $812.1 million, down from $850.4 million a year earlier, after organic net sales had increased 9.2% in the first quarter. Stormwater sales rose 6.2% to $712.1 million, including $77.3 million from the February acquisition of National Diversified Sales. On an organic basis, Stormwater sales decreased 5.3%, reversing a 9.7% organic increase in the first quarter. Wastewater sales decreased 1.3% to $177.3 million.

Adjusted EBITDA was $286.8 million, down 0.2% from $287.5 million a year earlier, for a 32.2% margin, after Adjusted EBITDA increased 28.8% to $358.3 million and the margin expanded 230 basis points to 35.8% in the first quarter. Gross profit increased 1.7% to $345.9 million. The company said the increase was primarily driven by NDS, as well as favorable price/cost more than offsetting unfavorable volume and transportation costs.

Net income from continuing operations decreased 14.6% to $133.6 million, and diluted earnings from continuing operations decreased 11.0% to $1.77 a share. Selling, general and administrative expenses were $129.6 million, or 14.6% of sales, which the company attributed primarily to NDS and associated transaction costs.

President and Chief Executive Officer Scott Barbour said the demand environment is softer today than when the company issued guidance in May, driven by higher interest rates and ongoing geopolitical uncertainty. He said the company is experiencing lower inflationary pressure than initially expected on materials, mitigating the need for corresponding pricing actions that had previously been included in the net sales outlook.

Based on results to date, current visibility, backlog of existing orders and business trends, ADS updated its fiscal 2027 targets. Net sales are now expected in the range of $3.300 billion to $3.400 billion. Adjusted EBITDA is now expected in the range of $1.000 billion to $1.030 billion. Capital expenditures are expected to be approximately $200 million. The company said the Adjusted EBITDA outlook is largely the same despite the change in net sales guidance.

In the six months ended September 30, 2026, net sales increased 12.5% to $1,890.5 million. Organic net sales increased 2.3%. Adjusted EBITDA increased 14.0% to $645.1 million, with a first-half margin of 34.1%, which the company said represents the highest first-half profitability in its history. Net cash provided by operating activities was $458.2 million. Free cash flow was $359.5 million. The company repurchased 2.7 million shares for $375.1 million. Net debt was $1,619.9 million as of September 30, 2026. Total liquidity was $891.8 million, including $153.2 million of cash and $738.6 million of availability under committed credit facilities. Trailing-twelve-month leverage was 1.6 times Adjusted EBITDA.

ADS announced a proposed acquisition of StormTrap, a leader in large-volume, space-constrained and highly engineered stormwater solutions. Barbour said StormTrap complements and further diversifies the portfolio, fits the company’s specification-driven commercial model and creates new cross-selling opportunities in non-residential and infrastructure markets.