Earnings release
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Exhibit 99.1 • • • ADS ADVANCED DRAINAGE SYSTEMS ANNOUNCES FIRST QUARTER Net sales increased 20.6 % to $ 1.0 billion Organic net sales increased 9.2 % FISCAL 2027 RESULTS 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 . 1
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2 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 A djusted 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 finan cial 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 drainag e and onsite wastewater products used across commercial, residential, infrastructure, and agricultural applications, while deliveri ng 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 pl astic 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, opera tions 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 a nd 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
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3 non-residential and residential construction markets and infrastructure spending; the risks of increasing competition in our exis ting and future markets; uncertainties surrounding the integration and realization of anticipated benefits of acquisitions or d oing 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 port ion 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 climat e 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 op erations; 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 ti me 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, e xcept as required by law. For more information, please contact: Michael Higgins VP, Corporate Strategy & Investor Relations (614) 658-0050 Michael.Higgins@adspipe.com
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4 Financial Statements ADV ANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited)
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5 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
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6 ADV ANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited)
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7 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
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8 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
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9 ADV ANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
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10 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)
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11 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
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12 Non-GAAP Financial Measures This press release contains financial information determined by methods other than in accordance with accounting principles ge nerally 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 i n 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
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13 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
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14 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 t he 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 fr om 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 t he Company’s continuing operations. The following table presents a reconciliation of Net Sales to Organic Net Sales for the Company:
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15 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 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.