Advanced Drainage Systems reported fiscal second‑quarter 2026 results that surpassed analyst expectations, with net sales of $850.4 million, up 8.7% from $782.6 million a year earlier. Adjusted earnings per share were $1.99, a $0.29 (17%) beat over the consensus estimate of $1.70, while adjusted EBITDA rose to $287.5 million, up 17% from $245.6 million a year ago and translating into a margin of 33.8% versus 31.4% in the prior year.
Revenue growth was driven by a 25.2% increase in Infiltrator sales to $179.7 million, a 13.0% rise in Allied Products and other sales to $199.0 million, and a modest 1.6% gain in domestic pipe sales to $413.0 million. The strong performance in Infiltrator reflects the recent Orenco acquisition and double‑digit growth in tanks and advanced treatment products, while Allied’s double‑digit expansion underscores the company’s shift toward higher‑margin solutions.
The earnings beat is largely attributable to disciplined cost management and a favorable product mix. Higher‑margin Infiltrator and Allied segments offset lower‑margin domestic pipe sales, and pricing power in the stormwater and wastewater markets allowed the company to maintain an expanded adjusted EBITDA margin despite modest inflationary pressures. The $0.29 EPS beat also reflects the absence of significant one‑time charges and the continued efficiency of the company’s operating model.
Management raised its fiscal 2026 outlook, projecting net sales of $2.900 billion to $2.990 billion and adjusted EBITDA of $900 million to $940 million—an increase of roughly 2% for revenue and 5% for EBITDA at the midpoint of the ranges. The guidance lift signals confidence in sustained demand, the positive impact of recent acquisitions, and the company’s ability to preserve margin expansion in a challenging macro environment.
The quarter’s results were bolstered by the integration of Orenco and River Valley Pipe, and the pending acquisition of NDS, a $1 billion deal (approximately $875 million net of tax benefits) expected to close in early 2026. The NDS transaction is projected to deliver over $25 million in annual cost synergies and expand ADS’s footprint in residential stormwater and irrigation markets.
CEO Scott Barbour highlighted the quarter as a “testament to the company’s execution” and noted that “inorganic growth from Orenco and River Valley Pipe contributed 3.6% of the 8.7% revenue increase.” CFO Scott Cottrill added that “revenue increased 9% to $850 million, and we were very pleased with the 17% rise in adjusted EBITDA year‑over‑year.”
Management acknowledged a challenging macro environment marked by high interest rates and tepid construction demand, but emphasized that secular tailwinds—such as growing infrastructure spending and environmental regulations—continue to support long‑term demand for water‑management solutions. The company’s focus on higher‑margin segments and strategic acquisitions positions it to navigate short‑term headwinds while sustaining growth momentum.
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