Advanced Drainage Systems, Inc 10-Q for FY2027 Q2

Advanced Drainage Systems, Inc. (WMS)

10-Q 2026-11-05 For: 2026-09-30

Added on November 05, 2026

About this 10-Q

Advanced Drainage Systems, Inc filed this 10-Q on November 5, 2026, covering the quarter ended September 30, 2026 (FY2027 Q2).

Advanced Drainage Systems, Inc. reported second-quarter fiscal 2027 net sales of $889.4 million, up 4.6%, while net income from continuing operations fell 14.6% to $133.6 million. Adjusted EBITDA decreased 0.2% to $286.8 million. AI summary

Headline figures

Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $889.41M; up 4.6% from $850.38M a year earlier
Net income: $110.44M; down 29.2% from net income of $156.02M a year earlier
Diluted EPS: $1.46; down 26.6% from $1.99 a year earlier

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Delaware			51-0105665
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	WMS	New York Stock Exchange


	September 30, 2026		March 31, 2026
ASSETS
Current assets:
Cash	$	153,245	$	223,012
Receivables (less allowance for doubtful accounts of $4,657 and $4,654, respectively)	429,452		390,536
Inventories	563,775		543,381
Assets held for sale	11,415		43,451
Other current assets	36,689		30,449
Total current assets	1,194,576		1,230,829
Property, plant and equipment, net	1,248,456		1,217,165
Other assets:
Goodwill	1,041,156		1,042,716
Intangible assets, net	808,408		848,527
Other assets	170,887		166,386
Total assets	$	4,463,483	$	4,505,623
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of debt obligations	$	7,955	$	5,865
Current maturities of finance lease obligations	40,517		38,136
Accounts payable	283,525		237,706
Liabilities held for sale	7,277		15,139
Other accrued liabilities	210,909		212,623
Accrued income taxes	11,853		—
Total current liabilities	562,036		509,469
Long-term debt obligations (less unamortized debt issuance costs of $16,951 and $18,428, respectively)	1,603,242		1,605,958
Long-term finance lease obligations	121,392		121,935
Deferred tax liabilities	230,852		220,994
Other liabilities	96,605		91,303
Total liabilities	$	2,614,127	$	2,549,659
Commitments and contingencies (see Note 13)
Mezzanine equity:
Redeemable common stock: $0.01 par value; 4,249 and 4,533 shares outstanding, respectively	69,045		73,652
Total mezzanine equity	69,045		73,652
Stockholders’ equity:
Common stock; $0.01 par value: 1,000,000 shares authorized; 85,923 and 85,319 shares issued, respectively; 70,456 and 72,654 shares outstanding, respectively	11,716		11,710
Paid-in capital	1,378,920		1,342,091
Common stock in treasury, at cost	(1,711,567)		(1,325,713)
Accumulated other comprehensive loss	(35,139)		(32,290)
Retained earnings	2,111,424		1,862,936
Total ADS stockholders’ equity	1,755,354		1,858,734
Noncontrolling interest in subsidiaries	24,957		23,578
Total stockholders’ equity	1,780,311		1,882,312
Total liabilities, mezzanine equity and stockholders’ equity	$	4,463,483	$	4,505,623


	Three Months Ended September 30,				Six Months Ended September 30,
	2026		2025		2026		2025
Net sales	$	889,406	$	850,381	$	1,890,518	$	1,680,261
Cost of goods sold	543,551		510,249		1,136,616		1,009,691
Gross profit	345,855		340,132		753,902		670,570
Operating expenses:
Selling, general and administrative	129,617		119,224		260,435		223,185
Loss (gain) on disposal of assets and costs from exit and disposal activities	1,302		(15,926)		3,923		(8,902)
Intangible amortization	20,061		13,539		40,121		27,246
Income from operations	194,875		223,295		449,423		429,041
Other expense:
Interest expense	27,515		23,116		54,555		46,145
Interest income and other, net	(9,136)		(8,012)		(10,588)		(14,717)
Income before income taxes	176,496		208,191		405,456		397,613
Income tax expense	44,206		52,399		97,895		99,073
Equity in net income of unconsolidated affiliates	(1,333)		(708)		(2,630)		(2,051)
Net income from continuing operations	133,623		156,500		310,191		300,591
Net loss from discontinued operations, net of taxes	(23,522)		—		(29,175)		—
Net income	110,101		156,500		281,016		300,591
Less: net (loss) income attributable to noncontrolling interest	(338)		483		2,056		652
Net income attributable to ADS	$	110,439	$	156,017	$	278,960	$	299,939
Weighted average common shares outstanding:
Basic	75,367		77,752		75,943		77,697
Diluted	75,787		78,310		76,566		78,240
Net income from continuing operations per share available to common stockholders:
Basic	$	1.78	$	2.01	$	4.06	$	3.86
Diluted	$	1.77	$	1.99	$	4.02	$	3.83
Net loss from discontinued operations per share available to common stockholders:
Basic	$	(0.31)	$	—	$	(0.38)	$	—
Diluted	$	(0.31)	$	—	$	(0.38)	$	—
Net income per share available to common stockholders:
Basic	$	1.47	$	2.01	$	3.67	$	3.86
Diluted	$	1.46	$	1.99	$	3.64	$	3.83


	Three Months Ended September 30,				Six Months Ended September 30,
	2026		2025		2026		2025
Net income	$	110,101	$	156,500	$	281,016	$	300,591
Currency translation (loss) income	(2,457)		(1,119)		(2,546)		5,792
Comprehensive income	107,644		155,381		278,470		306,383
Less: other comprehensive (loss) income attributable to noncontrolling interest	(427)		526		303		1,862
Less: net (loss) income attributable to noncontrolling interest	(338)		483		2,056		652
Total comprehensive income attributable to ADS	$	108,409	$	154,372	$	276,111	$	303,869


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Common Stock			Paid-in Capital		Common Stock in Treasury			Accumulated Other Comprehensive Loss		Retained Earnings		Total ADS Stockholders’ Equity		Noncontrolling Interest in Subsidiaries		Total Stockholders’ Equity		Redeemable Common Stock			Total Mezzanine Equity
	Shares	Amount				Shares	Amount												Shares	Amount
Balance at July 1, 2025	84,247	$	11,700	$	1,294,545	11,942	$	(1,226,091)	$	(31,603)	$	1,622,535	$	1,671,086	$	19,205	$	1,690,291	5,415	$	87,985	$	87,985
Net income	—	—		—		—	—		—		156,017		156,017		483		156,500		—	—		—
Other comprehensive (loss) income	—	—		—		—	—		(1,645)		—		(1,645)		526		(1,119)		—	—		—
Common stock dividends ($0.18 per share)	—	—		—		—	—		—		(14,040)		(14,040)		—		(14,040)		—	—		—
KSOP redeemable common stock conversion	333	3		5,408		—	—		—		—		5,411		—		5,411		(333)	(5,411)		(5,411)
Exercise of common stock options	11	—		933		—	—		—		—		933		—		933		—	—		—
Restricted stock awards	11	—		—		—	(11)		—		—		(11)		—		(11)		—	—		—
Stock-based compensation expense	—	—		8,577		—	—		—		—		8,577		—		8,577		—	—		—
Other	—	—		(5)		—	—		—		—		(5)		—		(5)		—	—		—
Balance at September 30, 2025	84,602	$	11,703	$	1,309,458	11,942	$	(1,226,102)	$	(33,248)	$	1,764,512	$	1,826,323	$	20,214	$	1,846,537	5,082	$	82,574	$	82,574
Balance at April 1, 2025	83,750	$	11,694	$	1,277,694	11,886	$	(1,219,408)	$	(37,178)	$	1,492,634	$	1,525,436	$	17,700	$	1,543,136	5,702	$	92,652	$	92,652
Net income	—	—		—		—	—		—		299,939		299,939		652		300,591		—	—		—
Other comprehensive (loss) income	—	—		—		—	—		3,930		—		3,930		1,862		5,792		—	—		—
Common stock dividends ($0.36 per share)	—	—		—		—	—		—		(28,061)		(28,061)		—		(28,061)		—	—		—
KSOP redeemable common stock conversion	620	6		10,072		—	—		—		—		10,078		—		10,078		(620)	(10,078)		(10,078)
Exercise of common stock options	21	—		1,482		—	—		—		—		1,482		—		1,482		—	—		—
Restricted stock awards	95	1		—		28	(3,227)		—		—		(3,226)		—		(3,226)		—	—		—
Performance-based restricted stock units	83	1		—		28	(3,467)		—		—		(3,466)		—		(3,466)		—	—		—
Stock-based compensation expense	—	—		16,981		—	—		—		—		16,981		—		16,981		—	—		—
ESPP share issuance	33	1		3,235		—	—		—		—		3,236		—		3,236		—	—		—
Other	—	—		(6)		—	—		—		—		(6)		—		(6)		—	—		—
Balance at September 30, 2025	84,602	$	11,703	$	1,309,458	11,942	$	(1,226,102)	$	(33,248)	$	1,764,512	$	1,826,323	$	20,214	$	1,846,537	5,082	$	82,574	$	82,574


	Three Months Ended September 30,				Six Months Ended September 30,
(Amounts in thousands)	2026		2025		2026		2025
Stormwater
Domestic - Pipe	$	390,309	$	422,384	$	848,397	$	846,990
Domestic - Allied Products	276,511		198,970		579,898		386,476
International	56,277		58,657		115,744		107,148
Total Stormwater	723,097		680,011		1,544,039		1,340,614
Wastewater	197,575		196,368		406,495		391,330
Intersegment Eliminations	(31,266)		(25,998)		(60,016)		(51,683)
Consolidated Net Sales	$	889,406	$	850,381	$	1,890,518	$	1,680,261


(Amounts in thousands)	Preliminary Amount		Valuation Adjustments		Updated Amount
Cash and cash equivalents	$	3,189	$	—	$	3,189
Accounts receivable	44,944		1,800		46,744
Inventory	93,092		(494)		92,598
Other current assets	1,359		—		1,359
Assets held for sale(a)	42,554		—		42,554
Property, plant and equipment	67,699		—		67,699
Goodwill	317,677		(1,378)		316,299
Intangible assets	456,920		—		456,920
Deferred tax assets	5,751		(488)		5,263
Other assets	17,212		—		17,212
Total assets acquired	1,050,397		(560)		1,049,837

Accounts payable	(10,664)		—		(10,664)
Accrued expenses	(29,285)		560		(28,725)
Liabilities held for sale(a)	(13,779)		—		(13,779)
Other liabilities	(11,788)		—		(11,788)
Total liabilities acquired	(65,516)		560		(64,956)
Total preliminary fair value of consideration transferred	$	984,881	$	—	$	984,881


(Amounts in thousands)	Three Months Ended September 30, 2025		Six Months Ended September 30, 2025
Net Sales	$	924,300	$	1,839,467
Net income attributable to ADS	168,442		320,266


(Amounts in thousands)	Three Months Ended September 30, 2026		Six Months Ended September 30, 2026
Net sales	$	4,457	$	11,672
Cost of goods sold	4,216		10,197
Gross profit	241		1,475
Selling, general and administrative expenses	909		2,238
Loss from classification to held for sale	23,825		29,818
Income tax benefit	(971)		(1,406)
Net loss from discontinued operations	$	(23,522)	$	(29,175)


			Six Months Ended September 30, 2026
Common stock price			$138.09
Expected stock price volatility			43.0%
Risk-free interest rate			4.3%
Weighted-average expected option life (years)			6
Dividend yield			0.58%


	Three Months Ended September 30,				Six Months Ended September 30,
(Amounts in thousands, except per share data)	2026		2025		2026		2025
NET INCOME PER SHARE—BASIC:
Net income from continuing operations available to common stockholders	$	133,961	$	156,017	$	308,135	$	299,939
Net loss from discontinued operations, net of tax	(23,522)		—		(29,175)		—
Net income attributable to common stockholders	110,439		156,017		278,960		299,939
Weighted average number of common shares outstanding – Basic	75,367		77,752		75,943		77,697
Net income from continuing operations available to common stockholders per common share - Basic	$	1.78	$	2.01	$	4.06	$	3.86
Net loss from discontinued operations per common share - Basic	$	(0.31)	$	—	$	(0.38)	$	—
Net income per common share – Basic	$	1.47	$	2.01	$	3.67	$	3.86
NET INCOME PER SHARE—DILUTED:
Net income from continuing operations available to common stockholders	$	133,961	$	156,017	$	308,135	$	299,939
Net loss from discontinued operations, net of tax	(23,522)		—		(29,175)		—
Net income attributable to common stockholders	110,439		156,017		278,960		299,939
Weighted average number of common shares outstanding – Basic	75,367		77,752		75,943		77,697
Assumed restricted stock	41		43		57		39
Assumed exercise of stock options	370		440		556		415
Assumed performance-based restricted stock units	9		75		10		89
Weighted average number of common shares outstanding – Diluted	75,787		78,310		76,566		78,240
Net income from continuing operations available to common stockholders per common share - Diluted	$	1.77	$	1.99	$	4.02	$	3.83
Net loss from discontinued operations per common share - Diluted	$	(0.31)	$	—	$	(0.38)	$	—
Net income per common share – Diluted	$	1.46	$	1.99	$	3.64	$	3.83
Potentially dilutive securities excluded as anti-dilutive	61		50		60		53


Consolidated Statements of Operations data:	For the Three Months Ended September 30,
(Amounts in thousands)	2026				2025
Net sales	$	889,406	100.0	%	$	850,381	100.0	%
Cost of goods sold	543,551		61.1		510,249		60.0
Gross profit	345,855		38.9		340,132		40.0
Selling, general and administrative expenses	129,617		14.6		119,224		14.0
Loss (gain) on disposal of assets and costs from exit and disposal activities	1,302		0.1		(15,926)		(1.9)
Intangible amortization	20,061		2.3		13,539		1.6
Income from operations	194,875		21.9		223,295		26.3
Interest expense	27,515		3.1		23,116		2.7
Interest income and other, net	(9,136)		(1.0)		(8,012)		(0.9)
Income before income taxes	176,496		19.8		208,191		24.5
Income tax expense	44,206		5.0		52,399		6.2
Equity in net income of unconsolidated affiliates	(1,333)		(0.1)		(708)		(0.1)
Net income from continuing operations	133,623		15.0		156,500		18.4
Net loss from discontinued operations	(23,522)		(2.6)		—		—
Net income	110,101		12.4		156,500		18.4
Less: net (loss) income attributable to noncontrolling interest	(338)		—		483		0.1
Net income attributable to ADS	$	110,439	12.4	%	$	156,017	18.3	%


(Amounts in thousands)	September 30, 2026		March 31, 2026
Contract asset - product returns	$	2,120	$	1,383
Refund liability	6,736		4,112


(Amounts in thousands)	2026		2025
Accrual balance at April 1	$	1,201	$	—
Costs incurred	9,213		15,966
Non-cash charges	—		(3,884)
Expenses paid	(9,768)		(7,845)
Accrual balance at end of period	$	646	$	4,237


(Amounts in thousands)	September 30, 2026		March 31, 2026
Term Loan Facility	$	598,500	$	600,000
Senior Notes due 2030	500,000		500,000
Senior Notes due 2034	500,000		500,000
Revolving Credit Facility	—		—
Other debt	29,648		30,251
Total	1,628,148		1,630,251
Less: Unamortized debt issuance costs	(16,951)		(18,428)
Less: Current maturities	(7,955)		(5,865)
Long-term debt obligations	$	1,603,242	$	1,605,958


	September 30, 2026				March 31, 2026
(Amounts in thousands)	Fair Value		Carrying Value		Fair Value		Carrying Value
Senior Notes due 2030	$	495,395	$	500,000	$	505,940	$	500,000
Senior Notes due 2034	462,150		500,000		489,230		500,000
Equipment Financing	2,364		2,448		2,961		3,056
Total fair value	$	959,909	$	1,002,448	$	998,131	$	1,003,056


Consolidated Statements of Operations data:	For the Six Months Ended September 30,
(Amounts in thousands)	2026				2025
Net sales	$	1,890,518	100.0	%	$	1,680,261	100.0	%
Cost of goods sold	1,136,616		60.1		1,009,691		60.1
Gross profit	753,902		39.9		670,570		39.9
Selling, general and administrative expenses	260,435		13.8		223,185		13.3
Loss (gain) on disposal of assets and costs from exit and disposal activities	3,923		0.2		(8,902)		(0.5)
Intangible amortization	40,121		2.1		27,246		1.6
Income from operations	449,423		23.8		429,041		25.5
Interest expense	54,555		2.9		46,145		2.7
Interest income and other, net	(10,588)		(0.6)		(14,717)		(0.9)
Income before income taxes	405,456		21.4		397,613		23.7
Income tax expense	97,895		5.2		99,073		5.9
Equity in net income of unconsolidated affiliates	(2,630)		(0.1)		(2,051)		(0.1)
Net income from continuing operations	310,191		16.4		300,591		17.9
Net loss from discontinued operations, net of taxes	(29,175)		(1.5)		—		—
Net income	281,016		14.9		300,591		17.9
Less: net income attributable to noncontrolling interest	2,056		0.1		652		—
Net income attributable to ADS	$	278,960	14.8	%	$	299,939	17.9	%


(Amounts in thousands)	September 30, 2026
Total debt (debt and finance lease obligations)	$	1,773,106
Cash	153,245
Net debt (total debt less cash)	1,619,861
Leverage Ratio	1.6


(Amounts in thousands)	September 30, 2026
Revolver capacity	$	750,000
Less: outstanding borrowings	—
Less: letters of credit	(11,365)
Revolver available liquidity	$	738,635


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan
	(amounts in thousands, except per share data)
July 1, 2026 to July 31, 2026	418	$	142.22	418	$	763,160
August 1, 2026 to August 31, 2026	—	—		—	763,160
September 1, 2026 to September 30, 2026	667	128.66		667	677,295
Total	1,085	$	133.87	1,085	$	677,295


Exhibit Number						Exhibit Description

2.1						Securities Purchase Agreement between StormTrap Investors, L.L.C., as representative of the Sellers, the Sellers, ADS Investment LLC and Advanced Drainage Systems, Inc. (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on October 5, 2026).
31.1*						Certification of President and Chief Executive Officer of Advanced Drainage Systems, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Executive Vice President and Chief Financial Officer of Advanced Drainage Systems, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*						Certification of Principal Executive Officer of Advanced Drainage Systems, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*						Certification of Principal Financial Officer of Advanced Drainage Systems, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						Inline XBRL Taxonomy Extension Schema.
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase.
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase.
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase.
104						The cover page for the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2026, has been formatted in Inline XBRL and contained in Exhibit 101.


ADVANCED DRAINAGE SYSTEMS, INC.

By:						/s/ D. Scott Barbour
						D. Scott Barbour
						President and Chief Executive Officer
						(Principal Executive Officer)

By:						/s/ Scott A. Cottrill
						Scott A. Cottrill
						Executive Vice President, Chief Financial Officer and Secretary
						(Principal Financial Officer)

By:						/s/ Tim A. Makowski
						Tim A. Makowski
						Senior Vice President, Chief Accounting Officer


			By:			/s/ Scott A. Cottrill
			Scott A. Cottrill
			Executive Vice President,
			Chief Financial Officer and
			Secretary
			(Principal Financial Officer)


			/s/ Scott A. Cottrill
			Scott A. Cottrill
			Chief Financial Officer
			(Principal Financial Officer)