ADVANCED DRAINAGE SYSTEMS, INC. Q1 FY27 Results

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. 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.