Advanced Drainage Systems (NYSE: WMS) posts 21% Q1 sales rise, lifts dividend
Rhea-AI Filing Summary
Advanced Drainage Systems reported fiscal first‑quarter 2027 results that management described as a strong start, with net sales up 20.6% to $1.0 billion and net income from continuing operations up 22.5% to $176.6 million. Diluted EPS from continuing operations rose 22.8% to $2.26.
Growth was led by Stormwater, where sales rose 24.2% to $809.4 million, including $94.7 million from the acquisition of NDS; organic stormwater sales increased 9.7%. Wastewater sales increased 7.5% to $191.7 million. Adjusted EBITDA grew 28.8% to $358.3 million, expanding margin to 35.8% from 33.5%.
Operating cash flow was $260.4 million and free cash flow $203.2 million, with net debt of $1.60 billion and a leverage ratio of 1.5x Adjusted EBITDA. The company repurchased 1.6 million shares for $228.5 million and announced an 11% higher quarterly dividend of $0.20 per share. Full‑year fiscal 2027 guidance was reaffirmed for net sales of $3.35–$3.55 billion and Adjusted EBITDA of $1.0–$1.05 billion.
Positive
- Strong top- and bottom-line growth: Q1 net sales rose 20.6% to $1.0 billion, net income from continuing operations increased 22.5% to $176.6 million, diluted EPS grew 22.8% to $2.26, and Adjusted EBITDA increased 28.8% to $358.3 million with 230 bps margin expansion.
- NDS acquisition and organic growth: Stormwater sales increased 24.2% to $809.4 million, including $94.7 million from NDS, while organic stormwater sales grew 9.7% and organic net sales overall increased 9.2%, demonstrating both acquisition and underlying demand contributions.
- Solid cash generation and balance sheet: Q1 operating cash flow was $260.4 million and free cash flow $203.2 million. Net debt was $1,603.4 million with a trailing twelve‑month leverage ratio of 1.5x Adjusted EBITDA and total liquidity of $900.9 million.
- Meaningful capital returns: The company repurchased 1.6 million shares for $228.5 million, with $822.5 million remaining under its authorization, and increased its quarterly dividend by 11% to $0.20 per share, reinforcing an ongoing capital return strategy.
Negative
- Margin compression expected for full year: Despite strong Q1 profitability, fiscal 2027 guidance calls for Adjusted EBITDA margin of 29.6%–29.9%, down from 31.6% in fiscal 2026, implying 170–200 basis points of anticipated margin erosion for the year.
Filing Explained
The August 6 Form 8-K reports that Advanced Drainage Systems’ board approved a
8-K Event Classification
4 items: 2.02, 7.01, 8.01, 9.01
4 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 7.01
Regulation FD Disclosure
Disclosure
Material non-public information disclosed under Regulation Fair Disclosure, often investor presentations or guidance.
Item 8.01
Other Events
Other
Voluntary disclosure of events the company deems important to shareholders but not covered by other items.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Net sales: $1,001.1 million
Diluted EPS from continuing operations: $2.26
Adjusted EBITDA: $358.3 million
+5 more
8 metrics
Net sales
$1,001.1 million
Three months ended June 30, 2026 net sales, up 20.6% year over year
Diluted EPS from continuing operations
$2.26
Three months ended June 30, 2026, up 22.8% versus prior-year quarter
Adjusted EBITDA
$358.3 million
Q1 fiscal 2027 Adjusted EBITDA, up 28.8% with a 35.8% margin versus 33.5% last year
Free cash flow
$203.2 million
Free cash flow for the three months ended June 30, 2026
Net debt
$1,603.4 million
Total debt and finance lease obligations net of cash as of June 30, 2026
Total liquidity
$900.9 million
Cash plus availability under committed credit facilities as of June 30, 2026
Quarterly dividend per share
$0.20
Cash dividend payable September 15, 2026, 11% above prior-year amount
Fiscal 2027 net sales guidance
$3.350–$3.550 billion
Full-year fiscal 2027 net sales target range confirmed by management
Key Terms
Adjusted EBITDA, Free cash flow, Organic Net Sales, inventory step up, +1 more
5 terms
Adjusted EBITDA financial
"Adjusted EBITDA (Non-GAAP) increased 28.8% to $358.3 million, expanding our Adjusted EBITDA margin"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Free cash flow financial
"Free cash flow (Non-GAAP) was $203.2 million, as compared to $222.4 million in the prior year"
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
Organic Net Sales financial
"Organic Net Sales and Adjusted Earnings per Share have been provided in the financial statement tables"
Organic net sales represent the revenue generated from a company's core business activities, excluding the effects of acquisitions, divestments, or currency changes. It shows how well the company is growing through its existing products and services, similar to tracking how a plant grows from its own roots rather than by adding new plants. Investors use this measure to assess the true growth and health of a company's ongoing operations.
inventory step up financial
"Inventory step up related to acquisition of NDS | 14,197 | | | —"
mezzanine equity financial
"Mezzanine equity: Redeemable common stock | 71,848 | | | 73,652"
Mezzanine equity is a layer of financing that sits between bank loans and full ownership, combining elements of borrowed money and equity. It often gives lenders higher potential returns in exchange for taking more risk, sometimes with the option to convert into ownership or receive extra payments; think of it as a middle seat that pays more because it’s less secure than front-row debt. Investors watch it because it affects a company’s debt risk, potential dilution of ownership, and expected returns.
Offering Details
earnings_snapshot
Offering
Offering Type
earnings_snapshot
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did Advanced Drainage Systems (WMS) perform in fiscal Q1 2027?
Advanced Drainage Systems delivered higher results, with net sales up 20.6% to $1.0 billion and net income from continuing operations up 22.5% to $176.6 million. Adjusted EBITDA increased 28.8% to $358.3 million, and diluted EPS from continuing operations rose 22.8% to $2.26.
What dividend did Advanced Drainage Systems (WMS) declare and when will it be paid?
The Board approved a quarterly cash dividend of $0.20 per share, an 11% increase over the prior‑year amount. The dividend is payable on September 15, 2026, to shareholders of record at the close of business on September 1, 2026.
How much stock did Advanced Drainage Systems (WMS) repurchase in Q1 fiscal 2027?
During the quarter, the company repurchased 1.6 million shares of common stock for a total cost of $228.5 million. As of June 30, 2026, approximately $822.5 million of common stock remained available under its existing stock repurchase authorization.
What guidance did Advanced Drainage Systems (WMS) provide for fiscal 2027?
For fiscal 2027, management reaffirmed targets for net sales of $3.350–$3.550 billion and Adjusted EBITDA of $1.0–$1.050 billion. The company also expects capital expenditures of about $200 million, reflecting ongoing investment alongside continued profitability focus.
What is Advanced Drainage Systems’ (WMS) leverage and liquidity position?
As of June 30, 2026, the company reported net debt of $1,603.4 million and a trailing twelve‑month leverage ratio of 1.5x Adjusted EBITDA. Total liquidity was $900.9 million, including $162.3 million of cash and $738.6 million of availability under committed credit facilities.
How did Advanced Drainage Systems’ (WMS) segments perform in Q1 fiscal 2027?
Stormwater net sales rose 24.2% to $809.4 million, including $94.7 million from the NDS acquisition and 9.7% organic growth. Wastewater net sales increased 7.5% to $191.7 million, supported by higher tanks and residential advanced treatment sales.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 6, 2026
(Exact name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |||||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||||||||
Registrant’s Telephone Number, Including Area Code: (800 ) 733-7473
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On August 6, 2026, Advanced Drainage Systems, Inc. (the "Company") issued a press release setting forth the Company’s unaudited results for the fiscal first quarter ended June 30, 2026. A copy of the Company’s press release with the results is being furnished as Exhibit 99.1 and hereby incorporated by reference.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities under Section 18 of the Exchange Act and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.
Item 7.01 Regulation FD Disclosure
As previously announced, at 10:00 a.m. (Eastern time) on August 6, 2026, the Company’s President and Chief Executive Officer, Scott Barbour, and Chief Financial Officer, Scott Cottrill, will host a conference call and webcast to discuss the Company’s unaudited results for the first quarter ended June 30, 2026. A copy of the Company’s slides forming the basis of the presentation is being furnished as Exhibit 99.2 and hereby incorporated by reference.
The live webcast will also be accessible via the "Events Calendar" section of the Company’s Investor Relations website, www.investors.ads-pipe.com. An archived version of the webcast will be available following the call.
Item 8.01 Other Events
On August 6, 2026, the Company issued a press release announcing the approval by the Board of Directors (the "Board") of the Company of the declaration of a cash dividend of $0.20 per share, payable on September 15, 2026, to stockholders of record at the close of business on September 1, 2026. A copy of the Company’s press release is attached hereto as Exhibit 99.3 and hereby incorporated by reference.
Item 9.01 Financial Statements and Exhibits.
(d)Exhibits
The following exhibits are being furnished as part of this report:
| 99.1 | Press Release of Advanced Drainage Systems, Inc., dated August 6, 2026, regarding earnings | |||||||
| 99.2 | Presentation slides, dated August 6, 2026, regarding earnings | |||||||
| 99.3 | Press Release of Advanced Drainage Systems, Inc., dated August 6, 2026, regarding dividend | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ADVANCED DRAINAGE SYSTEMS, INC. | |||||||||||
| Date: August 6, 2026 | By: | /s/ Scott A. Cottrill | |||||||||
| Name: | Scott A. Cottrill | ||||||||||
| Title: | EVP, CFO & Secretary | ||||||||||
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Exhibit 99.1
ADVANCED DRAINAGE SYSTEMS ANNOUNCES FIRST QUARTER
FISCAL 2027 RESULTS
•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 6, 2026) – 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.
1
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
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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.
For more information, please contact:
Michael Higgins
VP, Corporate Strategy & Investor Relations
(614) 658-0050
Michael.Higgins@adspipe.com
3
Financial Statements
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
| Three Months Ended June 30, | |||||||||||
| (In thousands, except per share data) | 2026 | 2025 | |||||||||
| Net sales | $ | 1,001,112 | $ | 829,880 | |||||||
| Cost of goods sold | 593,065 | 499,442 | |||||||||
| Gross profit | 408,047 | 330,438 | |||||||||
| Operating expenses: | |||||||||||
| Selling, general and administrative | 130,818 | 103,961 | |||||||||
Loss on disposal of assets and costs from exit and disposal activities | 2,621 | 7,024 | |||||||||
| Intangible amortization | 20,060 | 13,707 | |||||||||
| Income from operations | 254,548 | 205,746 | |||||||||
| Other expense: | |||||||||||
| Interest expense | 27,040 | 23,029 | |||||||||
| Derivative (gains) loss and other (income) expense, net | (1,452) | (6,705) | |||||||||
| Income (loss) before income taxes | 228,960 | 189,422 | |||||||||
| Income tax expense (benefit) | 53,689 | 46,674 | |||||||||
| Equity in net (income) of unconsolidated affiliates | (1,297) | (1,343) | |||||||||
| Net income from continuing operations | 176,568 | 144,091 | |||||||||
| Net loss from discontinued operations, net of taxes | (5,653) | — | |||||||||
| Net income | 170,915 | 144,091 | |||||||||
| Less: net income attributable to noncontrolling interest | 2,394 | 169 | |||||||||
| Net income attributable to ADS | $ | 168,521 | $ | 143,922 | |||||||
| Weighted average common shares outstanding: | |||||||||||
| Basic | 76,526 | 77,641 | |||||||||
| Diluted | 77,024 | 78,122 | |||||||||
| Net income from continuing operations per share: | |||||||||||
| Basic | $ | 2.28 | $ | 1.85 | |||||||
| Diluted | $ | 2.26 | $ | 1.84 | |||||||
| Net loss from discontinued operations per share: | |||||||||||
| Basic | $ | (0.07) | $ | — | |||||||
| Diluted | $ | (0.07) | $ | — | |||||||
| Net income per share: | |||||||||||
| Basic | $ | 2.20 | $ | 1.85 | |||||||
| Diluted | $ | 2.19 | $ | 1.84 | |||||||
| Cash dividends declared per share | $ | 0.20 | $ | 0.18 | |||||||
4
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
| As of | |||||||||||
| (Amounts in thousands) | June 30, 2026 | March 31, 2026 | |||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash | $ | 162,251 | $ | 223,012 | |||||||
| Receivables, net | 458,554 | 390,536 | |||||||||
| Inventories | 548,544 | 543,381 | |||||||||
| Assets held for sale | 38,534 | 43,451 | |||||||||
| Other current assets | 33,051 | 30,449 | |||||||||
| Total current assets | 1,240,934 | 1,230,829 | |||||||||
| Property, plant and equipment, net | 1,230,283 | 1,217,165 | |||||||||
| Other assets: | |||||||||||
| Goodwill | 1,042,531 | 1,042,716 | |||||||||
| Intangible assets, net | 828,469 | 848,527 | |||||||||
| Other assets | 167,766 | 166,386 | |||||||||
| Total assets | $ | 4,509,983 | $ | 4,505,623 | |||||||
| LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Current maturities of debt obligations | $ | 7,705 | $ | 5,865 | |||||||
| Current maturities of finance lease obligations | 38,174 | 38,136 | |||||||||
| Accounts payable | 298,242 | 237,706 | |||||||||
| Liabilities held for sale | 12,354 | 15,139 | |||||||||
| Other accrued liabilities | 212,411 | 212,623 | |||||||||
| Accrued income taxes | 16,748 | — | |||||||||
| Total current liabilities | 585,634 | 509,469 | |||||||||
| Long-term debt obligations, net | 1,604,779 | 1,605,958 | |||||||||
| Long-term finance lease obligations | 115,000 | 121,935 | |||||||||
| Deferred tax liabilities | 221,333 | 220,994 | |||||||||
| Other liabilities | 92,994 | 91,303 | |||||||||
| Total liabilities | 2,619,740 | 2,549,659 | |||||||||
| Mezzanine equity: | |||||||||||
| Redeemable common stock | 71,848 | 73,652 | |||||||||
| Total mezzanine equity | 71,848 | 73,652 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock | 11,714 | 11,710 | |||||||||
| Paid-in capital | 1,361,911 | 1,342,091 | |||||||||
| Common stock in treasury, at cost | (1,564,932) | (1,325,713) | |||||||||
| Accumulated other comprehensive loss | (33,109) | (32,290) | |||||||||
| Retained earnings | 2,016,109 | 1,862,936 | |||||||||
| Total ADS stockholders’ equity | 1,791,693 | 1,858,734 | |||||||||
| Noncontrolling interest in subsidiaries | 26,702 | 23,578 | |||||||||
| Total stockholders’ equity | 1,818,395 | 1,882,312 | |||||||||
| Total liabilities, mezzanine equity and stockholders’ equity | $ | 4,509,983 | $ | 4,505,623 | |||||||
5
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Three Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash Flows from Operating Activities | |||||||||||
| Net income (loss) | $ | 170,915 | $ | 144,091 | |||||||
| Less: Net loss from discontinued operations, net of taxes | (5,653) | — | |||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 62,157 | 50,228 | |||||||||
| Deferred income taxes | 1,160 | (3,748) | |||||||||
| Loss on disposal of assets and costs from exit and disposal activities | 2,621 | 7,024 | |||||||||
| Stock-based compensation | 13,274 | 8,404 | |||||||||
| Amortization of deferred financing charges | 960 | 511 | |||||||||
| Inventory step up related to NDS acquisition | 14,197 | — | |||||||||
| Fair market value adjustments to derivatives | 2,447 | 77 | |||||||||
| Equity in net income of unconsolidated affiliates | (1,297) | (1,343) | |||||||||
| Other operating activities | 1,911 | 809 | |||||||||
| Changes in working capital: | |||||||||||
| Receivables | (70,229) | (42,126) | |||||||||
| Inventories | (19,874) | 40,001 | |||||||||
| Prepaid expenses and other current assets | (4,166) | (5,945) | |||||||||
| Accounts payable, accrued expenses, and other liabilities | 83,350 | 76,994 | |||||||||
| Operating cash flows from discontinued operations | (2,684) | — | |||||||||
| Net cash provided by operating activities | 260,395 | 274,977 | |||||||||
| Cash Flows from Investing Activities | |||||||||||
| Capital expenditures | (57,151) | (52,598) | |||||||||
| Proceeds from disposal of assets or a business | 726 | — | |||||||||
| Acquisition, net of cash acquired | — | (19,576) | |||||||||
| Other investing activities | 1,419 | 2,240 | |||||||||
| Net cash used in investing activities | (55,006) | (69,934) | |||||||||
| Cash Flows from Financing Activities | |||||||||||
| Payments on syndicated Term Loan Facility | — | (1,750) | |||||||||
| Payments on Equipment Financing | (299) | (933) | |||||||||
| Payments on finance lease obligations | (9,514) | (8,335) | |||||||||
| Repurchase of common stock | (233,236) | — | |||||||||
| Cash dividends paid | (15,306) | (13,980) | |||||||||
| Proceeds from exercise of stock options | 475 | 549 | |||||||||
| Payment of withholding taxes on vesting of restricted stock units | (10,728) | (6,683) | |||||||||
| Net cash (used in) provided by financing activities | (268,608) | (31,132) | |||||||||
| Effect of exchange rate changes on cash | 112 | 1,098 | |||||||||
| Net change in cash | (63,107) | 175,009 | |||||||||
| Cash at beginning of period | 233,967 | 469,271 | |||||||||
| Cash at end of period | $ | 170,860 | $ | 644,280 | |||||||
| Less: cash held for sale | (8,478) | — | |||||||||
| Cash, excluding held for sale, at end of period | $ | 162,382 | $ | 644,280 | |||||||
| RECONCILIATION TO BALANCE SHEET | |||||||||||
| Cash | $ | 162,251 | $ | 638,268 | |||||||
| Restricted cash | 131 | 6,012 | |||||||||
| Total cash and restricted cash | $ | 162,382 | $ | 644,280 | |||||||
6
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
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||
| (Amounts in thousands) | Stormwater | Wastewater | Intersegment Eliminations | Total | |||||||||||||||||||
| Net sales: | |||||||||||||||||||||||
| Net sales from external customers | $ | 809,376 | $ | 191,736 | $ | — | $ | 1,001,112 | |||||||||||||||
| Intersegment net sales | 11,566 | 17,184 | (28,750) | — | |||||||||||||||||||
| Net sales | 820,942 | 208,920 | (28,750) | 1,001,112 | |||||||||||||||||||
| Significant segment expenses: | |||||||||||||||||||||||
| Costs of goods sold | 518,812 | 104,600 | (30,347) | 593,065 | |||||||||||||||||||
| Selling, general and administrative expenses | 100,681 | 17,650 | — | 118,331 | |||||||||||||||||||
Other segment items(a) | (72,252) | (8,789) | — | (81,041) | |||||||||||||||||||
Segment Adjusted EBITDA(b) | $ | 273,701 | $ | 95,459 | $ | 1,597 | |||||||||||||||||
Corporate and other costs(c) | 12,487 | ||||||||||||||||||||||
| Total consolidated Adjusted EBITDA | $ | 358,270 | |||||||||||||||||||||
| Reconciliation of total consolidated Adjusted EBITDA to income from continuing operations before income taxes: | |||||||||||||||||||||||
| Interest expense | 27,040 | ||||||||||||||||||||||
| Interest income | (1,291) | ||||||||||||||||||||||
| Depreciation and amortization | 62,157 | ||||||||||||||||||||||
| Stock-based compensation expense | 13,274 | ||||||||||||||||||||||
| Loss on disposal of assets and costs from exit and disposal activities | 2,621 | ||||||||||||||||||||||
Transaction costs(d) | 3,244 | ||||||||||||||||||||||
| Inventory step up related to acquisition of NDS | 14,197 | ||||||||||||||||||||||
Other adjustments(e) | 8,068 | ||||||||||||||||||||||
| Income before income taxes | 228,960 | ||||||||||||||||||||||
| Income tax expense | 53,689 | ||||||||||||||||||||||
| Equity in net income of unconsolidated affiliates | (1,297) | ||||||||||||||||||||||
| Net income from continuing operations | $ | 176,568 | |||||||||||||||||||||
7
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||
| (Amounts in thousands) | Stormwater | Wastewater | Intersegment Eliminations | Total | |||||||||||||||||||
| Net sales: | |||||||||||||||||||||||
| Net sales from external customers | $ | 651,527 | $ | 178,353 | $ | — | $ | 829,880 | |||||||||||||||
| Intersegment net sales | 9,076 | 16,609 | (25,685) | — | |||||||||||||||||||
| Net sales | 660,603 | 194,962 | (25,685) | 829,880 | |||||||||||||||||||
| Significant segment expenses: | |||||||||||||||||||||||
| Costs of goods sold | 427,119 | 97,251 | (24,928) | 499,442 | |||||||||||||||||||
| Selling, general and administrative expenses | 73,782 | 18,344 | — | 92,126 | |||||||||||||||||||
Other segment items(a) | (43,793) | (7,897) | — | (51,690) | |||||||||||||||||||
Segment Adjusted EBITDA(b) | $ | 203,495 | $ | 87,264 | $ | (757) | |||||||||||||||||
Corporate and other costs(c) | 11,835 | ||||||||||||||||||||||
| Total consolidated Adjusted EBITDA | $ | 278,167 | |||||||||||||||||||||
| Reconciliation of total consolidated Adjusted EBITDA to income from continuing operations before income taxes: | |||||||||||||||||||||||
| Interest expense | 23,029 | ||||||||||||||||||||||
| Interest income | (5,405) | ||||||||||||||||||||||
| Depreciation and amortization | 50,228 | ||||||||||||||||||||||
| Stock-based compensation expense | 8,404 | ||||||||||||||||||||||
| Loss on disposal of assets and costs from exit and disposal activities | 7,024 | ||||||||||||||||||||||
Transaction costs(d) | 807 | ||||||||||||||||||||||
Other adjustments(e) | 4,658 | ||||||||||||||||||||||
| Income before income taxes | 189,422 | ||||||||||||||||||||||
| Income tax expense | 46,674 | ||||||||||||||||||||||
| Equity in net income of unconsolidated affiliates | (1,343) | ||||||||||||||||||||||
| Net income from continuing operations | $ | 144,091 | |||||||||||||||||||||
a.Other segment items include depreciation, amortization recorded within cost of goods sold, stock-based compensation expense, inventory step-up costs, restructuring and realignment expense, and transaction costs.
b.The Company calculates Segment Adjusted EBITDA as net income from continuing operations before interest, income taxes, depreciation and amortization, stock-based compensation expense, non-cash charges and certain other gains and expenses.
c.Represents certain unallocated selling, general and administrative expenses required to reconcile segment Adjusted EBITDA to consolidated Adjusted EBITDA.
d.Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with business or asset acquisitions and dispositions.
e.Includes derivative fair value adjustments, foreign currency transaction (gains) losses, legal settlements, restructuring and realignment expense, and executive retirement expense (benefit).
Reconciliation of Adjusted EBITDA to Net Income - EBITDA and Adjusted EBITDA are non-GAAP financial measures that comprise net income before interest, income taxes, depreciation and amortization, stock-based compensation, non-cash charges and certain other expenses. The Company’s definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key metric used by management and the Company’s board of directors to assess financial performance and evaluate the effectiveness of the Company’s business strategies. Accordingly, management believes that Adjusted EBITDA provides useful information to investors and others in understanding and
8
evaluating our operating results in the same manner as the Company’s management and board of directors. In order to provide investors with a meaningful reconciliation, the Company has provided a reconciliation of Adjusted EBITDA to net income.
| Three Months Ended June 30, | |||||||||||
| (Amounts in thousands) | 2026 | 2025 | |||||||||
| Net income from Continuing Operations | $ | 176,568 | $ | 144,091 | |||||||
| Depreciation and amortization | 62,157 | 50,228 | |||||||||
| Interest expense | 27,040 | 23,029 | |||||||||
| Income tax expense | 53,689 | 46,674 | |||||||||
| EBITDA | 319,454 | 264,022 | |||||||||
Restructuring and realignment expense(a) | 5,336 | 8,795 | |||||||||
| Loss on disposal of assets | 459 | 1,198 | |||||||||
| Stock-based compensation expense | 13,274 | 8,404 | |||||||||
| Transaction costs | 3,244 | 807 | |||||||||
| Inventory step up related to acquisition of NDS | 14,197 | — | |||||||||
Interest income | (1,291) | (5,405) | |||||||||
Other adjustments(b) | 3,597 | 346 | |||||||||
| Adjusted EBITDA | $ | 358,270 | $ | 278,167 | |||||||
(a)Includes costs associated with closure of one distribution yard, as well as professional fees incurred in connection with supporting enterprise-wide restructuring and realignment initiatives. Excludes gain on sale of properties previously held-for-sale and equipment.
(b)Includes derivative fair value adjustments, foreign currency transaction (gains) losses, legal settlements, and the proportionate share of interest, income taxes, depreciation and amortization related to the South American Joint Venture, which is accounted for under the equity method of accounting and executive retirement expense.
Reconciliation of Free Cash Flow to Cash flow from Operating Activities - Free Cash Flow is a non-GAAP financial measure that comprises cash flow from operating activities less capital expenditures. Free Cash Flow is a measure used by management and the Company’s board of directors to assess the Company’s ability to generate cash. Accordingly, management believes that Free Cash Flow provides useful information to investors and others in understanding and evaluating our ability to generate cash flow from operations after capital expenditures. In order to provide investors with a meaningful reconciliation, the Company has provided a reconciliation of cash flow from operating activities to Free Cash Flow.
| Three Months Ended June 30, | |||||||||||
| (Amounts in thousands) | 2026 | 2025 | |||||||||
| Net cash flow provided by operating activities | $ | 260,395 | $ | 274,977 | |||||||
| Capital expenditures | (57,151) | (52,598) | |||||||||
| Free cash flow | $ | 203,244 | $ | 222,379 | |||||||
Organic Net Sales - Organic Net Sales is a non-GAAP financial measure that represents net sales excluding the impact of acquisitions and is intended to provide a meaningful comparison of sales growth attributable to underlying volume and pricing changes in the Company’s continuing operations. The following table presents a reconciliation of Net Sales to Organic Net Sales for the Company:
| Three Months Ended June 30, | |||||||||||
| (Amounts in thousands) | 2026 | 2025 | |||||||||
| Net Sales | $ | 1,001,112 | $ | 829,880 | |||||||
| Less: Net Sales from NDS | (94,687) | — | |||||||||
| Organic Net Sales | $ | 906,425 | $ | 829,880 | |||||||
Reconciliation of Diluted Earnings per Share from Continuing Operations to Adjusted Earnings per Share from Continuing Operations - Adjusted Earnings per Share From Continuing Operations excludes (gains) losses on disposals of assets or business, restructuring and realignment expenses, impairment charges and transaction costs. Adjusted Earnings per Share from Continuing
9
Operations is a measure used by management and may be useful for investors to evaluate the Company's operational performance. The following table presents diluted earnings per share from continuing operations on an adjusted basis to supplement the Company's discussion of its results of operations herein.
| Three Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Diluted Earnings Per Share from Continuing Operations | $ | 2.26 | $ | 1.84 | |||||||
Restructuring and realignment expense | 0.07 | 0.11 | |||||||||
| Loss on disposal of assets | 0.01 | 0.02 | |||||||||
| Transaction costs | 0.04 | 0.01 | |||||||||
| Inventory step up related to the acquisition of NDS | 0.18 | — | |||||||||
Income tax impact of adjustments (a) | (0.07) | (0.03) | |||||||||
| Adjusted Earnings per Share from Continuing Operations | $ | 2.49 | $ | 1.95 | |||||||
(a) The income tax impact of adjustments to each period is based on the statutory tax rate.
10
Q1 Fiscal 2027 Financial Results August 6, 2026
Management Presenters 2 Scott Barbour President and Chief Executive Officer Scott Cottrill Executive Vice President, Chief Financial Officer Craig Taylor President, Infiltrator Water Technologies Mike Higgins Vice President, Corporate Strategy & Investor Relations
Forward Looking Statements and Non - GAAP Financial Metrics 3 Forward Looking Statements Certain statements in this press release may be deemed to be forward - looking statements. These statements are not historical fac ts 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 ava ilability 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; di sruption 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 infrast ructure 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 synerg ies 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 man ufacturing 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; o ur 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 supp ly 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 proper ty 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 uncerta inties 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 cou ld 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 sh ould 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. Investor s a re 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. Non - GAAP Financial Measures This presentation includes references to Adjusted EBITDA and Free Cash Flow, non - GAAP financial measures. These non - GAAP financi al 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 GA AP. Adjusted EBITDA and Free Cash Flow may be different from non - GAAP financial measures used by other companies, even when similar terms are used to identify such measures. EBITDA and Adjusted EBITDA are non - GAAP financial measures that comprise net income before interest, income taxes, depreciation and amortization, stock - based compensation, non - cash charges and certain other expenses. The Company’s definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key metric used by management and the Company’s board of directors to assess financial performance and evaluate t he effectiveness of the Company’s business strategies. Accordingly, management believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as the Company’s management and board of directors. In order to provide investors with a meaningful reconciliation, the Company has provided reconciliations of Adjusted EBITDA to net income . Free Cash Flow is a non - GAAP financial measure that comprises cash flow from operating activities less capital expenditures. Free Cash Flow is a measure used by management and the Company’s board of directors to assess the Company’s ability to generate cash. Accordingly, management believes that Free Cash Flow provides us efu l information to investors and others in understanding and evaluating our ability to generate cash flow from operations after capital expenditures.
CEO Highlights 4 $652 $178 $809 $192 Stormwater Wastewater Q1 FY26 Q1 FY27 Sales +24% +8% • Stormwater revenue includes $95 million from NDS acquisition. • Stormwater organic revenue +10%, with 12% organic growth in Allied products and 9% growth in pipe products. • Wastewater revenue driven by growth in tanks and residential advanced treatment. Q1 Fiscal 2027 Revenue Q1 Fiscal 2027 Profitability 33.5% 35.8% Q1 FY26 Q1 FY27 Adjusted EBITDA Margin +230 bps • Continued favorable volume and price/cost performance. • Favorable mix of Allied products and Infiltrator, higher margin products. • Unfavorable transportation costs offsetting favorable manufacturing. Note: Sales based on net sales to external customers. Business Updates • Estimated $25 - $30 million of revenue pulled into Q1 from Q2. • Inflationary pressure on transportation and materials remains significant year - over - year. Favorable pricing covering inflation dollar - for- dollar for full year. • Peak inflationary pressure on materials expected in Q2. • Cordele, GA recycling facility production started in Q1. Storage Portfolio +18% Pictured right: Aquabox plastic crate installation
Q1 FY26 Volume Price / Mix, Materials Mfg / Trans SG&A and Other Q1 FY27 Q1 Fiscal 2027 Financial Performance 5 35.8% 33.5% Q1 FY27 Q1 FY26 $1,001 $830 Q1 FY27 Q1 FY26 +230 bps (USD, in millions)+21% Domestic Markets + Construction +20% + Non - Residential +16% + Residential +29% + Infrastructure +7% + Agriculture +22% Revenue Performance By Business + Stormwater +24% + Pipe +9% + Allied Products +59% + Wastewater +8% $278 $75 $34 ($17) $358 Revenue Adj. EBITDA ($11) Note: Revenue performance is based on net sales to external customers.
Free Cash Flow and Capital Structure 6 FY 2027 FY 2026 ∆ Consolidated Adjusted EBITDA $358 $278 $80 Working capital (2) (53) (8) (45) Cash tax (1) (1) 0 Cash interest – paid (11) (10) (1) Cash interest – received 1 5 (4) Transaction costs (3) (3) (1) (2) Other (31) 12 (43) Consolidated cash flow from operations $260 $275 $(15) Capital expenditures (57) (53) (4) Consolidated Free Cash Flow $203 $222 $(19) Free Cash Flow (¹) Note: all figures in USD, $mm. Figures may not add due to rounding. 1. Operating Cash Flow less capital expenditures 2. Inventory, Trade Receivables, Accounts Payable 3. Legal, accounting and other professional fees incurred in connection with business or asset acquisitions and dispositions (in millions) June 30, 2026 March 31, 2026 Term Loan Facility $ 600 $ 600 Senior Notes 1000 1000 Revolving Credit Facility - - Finance Leases & Other Debt 183 190 Total debt $ 1,783 $ 1,790 Leverage 1.5x 1.6x Debt & Capital Leases (in millions) June 30, 2026 Unrestricted Cash $ 162 Availability under Revolving Credit Facility 739 Total Liquidity $ 901 Liquidity
Fiscal Year 2027 Guidance 7 Key Metric FY 2026 FY 2027 Y - o- Y Change Net Sales (in Millions) $3,050 $3,350 - $3,550 +10% to +16% Adj. EBITDA (in Millions) $963 $1,000 - $1,050 +4% to +9% Adj. EBITDA Margin 31.6% 29.6% - 29.9% (170) to (200) bps Fiscal 2027 Expectations
Q&A
Appendix 9
Fiscal 2027 Market Expectations 10 End Market Assumption Commentary Non - Residential Flat to up low - single digits • Economic/geopolitical uncertainty weighing on market, though market is fairly stable overall • Large project activity still going well Residential Down mid - to high - single digits • Interest rates and economic/geopolitical uncertainty weighing on market • Advanced Treatment market growing • Retail market (DIY) choppy Infrastructure Flat to up low - single digits • Streets & Highway spending supported by IIJA Agriculture Down double - digits • Rising input costs • Agriculture economy is soft International Flat to up low - single digits • Outlook stable in Canada and Mexico
Reconciliations 11 a.) Other segment items include depreciation, amortization recorded within cost of goods sold, stock - based compensation expense, inventory step - up costs, restructuring and realignment expense, and transaction costs. b.) The Company calculates Segment Adjusted EBITDA as net income from continuing operations before interest, income taxes, de preciation and amortization, stock - based compensation expense, non - cash charges and certain other gains and expenses. c.) Represents certain unallocated selling, general and administrative expenses required to reconcile segment Adjusted EBITDA to consolidated Adjusted EBITDA. d.) Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with busines s o r asset acquisitions and dispositions. e.) Includes derivative fair value adjustments, foreign currency transaction (gains) losses, legal settlements, restructuring and realignment expense, and executive retirement expense (benefit). (Amount in thousands) Net Sales: Stormwater Wastewater Intersegment Eliminations Total Net sales from external customers $ 809,376 $ 191,736 $ - $ 1,001,112 Intersegment net sales 11,566 17,184 (28,750) - Net Sales 820,942 208,920 (28,750) 1,001,112 Significant segment expenses: Cost of goods sold 518,812 104,600 (30,347) 593,065 Selling, general and administrative expenses 100,681 17,650 - 118,331 Other segment items(a) (72,252) (8,789) - (81,041) Segment Adjusted EBITDA(b) $ 273,701 $ 95,459 $ 1,597 Corporate and other costs(c) 12,487 Total consolidated Adjusted EBITDA $ 358,270 Interest expense 27,040 Interest income (1,291) Depreciation and amortization 62,157 Stock-based compensation expense 13,274 Loss on disposal of assets and costs from exit and disposal activities 2,621 Transaction costs(d) 3,244 Inventory step up related to acquisition of NDS 14,197 Other adjustments (e) 8,068 Income before income taxes $ 228,960 Income tax expense 53,689 Equity in net income of unconsolidated affiliates (1,297) Net income from continuing operations $ 176,568 Three Months Ended June 30, 2026 Reconciliation of total consolidated Adjusted EBITDA to income from continuing operations before income taxes:
Reconciliations 12 (Amount in thousands) Net Sales: Stormwater Wastewater Intersegment Eliminations Total Net sales from external customers $ 651,527 $ 178,353 $ - $ 829,880 Intersegment net sales 9,076 16,609 (25,685) - Net Sales 660,603 194,962 (25,685) 829,880 Significant segment expenses: Cost of goods sold 427,119 97,251 (24,928) 499,442 Selling, general and administrative expenses 73,782 18,344 - 92,126 Other segment items (a) (43,793) (7,897) - (51,690) Segment Adjusted EBITDA(b) $ 203,495 $ 87,264 $ (757) Corporate and other costs(c) 11,835 Total consolidated Adjusted EBITDA $ 278,167 Interest expense 23,029 Interest income (5,405) Depreciation and amortization 50,228 Stock-based compensation expense 8,404 Loss on disposal of assets and costs from exit and disposal activities 7,024 Transaction costs(d) 807 Other adjustments(e) 4,658 Income before income taxes $ 189,422 Income tax expense 46,674 Equity in net income of unconsolidated affiliates (1,343) Net income from continuing operations $ 144,091 Three Months Ended June 30, 2025 Reconciliation of total consolidated Adjusted EBITDA to income from continuing operations before income taxes: a.) Other segment items include depreciation, amortization recorded within cost of goods sold, stock - based compensation expense, inventory step - up costs, restructuring and realignment expense, and transaction costs. b.) The Company calculates Segment Adjusted EBITDA as net income from continuing operations before interest, income taxes, de preciation and amortization, stock - based compensation expense, non - cash charges and certain other gains and expenses. c.) Represents certain unallocated selling, general and administrative expenses required to reconcile segment Adjusted EBITDA to consolidated Adjusted EBITDA. d.) Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with busines s o r asset acquisitions and dispositions. e.) Includes derivative fair value adjustments, foreign currency transaction (gains) losses, legal settlements, restructuring and realignment expense, and executive retirement expense (benefit).
13 Reconciliations a.) Includes costs associated with closure of one distribution yard, as well as professional fees incurred in connection with su pporting enterprise - wide restructuring and realignment initiatives. Excludes gain on sale of properties previously held - for- sale and equipment. b.) Includes derivative fair value adjustments, foreign currency transaction (gains) losses, legal settlements, and the propo rtionate share of interest, income taxes, depreciation and amortization related to the South American Joint Venture, which is accounted for under the equ ity method of accounting and executive retirement expense. (Amounts in thousands) 2026 2025 Net income from continuing operations $ 176,568 $ 144,091 Depreciation and amortization 62,157 50,228 Interest expense 27,040 23,029 Income tax expense 53,689 46,674 EBITDA 319,454 264,022 Restructuring and realignment expense(a) 5,336 8,795 Loss on disposal of assets 459 1,198 Stock-based compensation expense 13,274 8,404 Transaction costs 3,244 807 Inventory step up related to acquisition of NDS 14,197 - Interest income (1,291) (5,405) Other adjustments(b) 3,597 346 Adjusted EBITDA $ 358,270 $ 278,167 Three Months Ended June 30,
Exhibit 99.3
ADVANCED DRAINAGE SYSTEMS ANNOUNCES QUARTERLY CASH DIVIDEND
HILLIARD, Ohio – (August 6, 2026) – 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 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.
For more information, please contact:
Michael Higgins
VP, Corporate Strategy & Investor Relations
(614) 658-0050
Michael.Higgins@adspipe.com