Advanced Drainage Systems, Q2 2027 Earnings Call Transcript

Advanced Drainage Systems reported 2% organic revenue growth in the first half despite challenging demand, with strength in Allied Products and non-residential markets such as data centers and warehouses offset by weakness in residential land development. The company cited record first-half adjusted EBITDA margin of 34.1% and said pricing has more than offset material and transportation inflation. Residential demand has weakened as higher interest rates curbed land development; non-residential activity remains uneven, while large projects continue to move forward.

Fiscal 2027 revenue guidance was reduced to $3.35 billion, mainly because raw-material inflation is expected to be lower than previously forecast; adjusted EBITDA guidance is $1.015 billion, with a 30.3% margin. ADS expects low-single-digit organic growth in the second half and pricing to offset material and freight costs. The planned $530 million StormTrap acquisition is expected to expand its engineered stormwater offering and create cross-selling opportunities; NDS is performing above its synergy plan, though cross-selling benefits are expected to build over time.