Advanced Drainage delivered quarterly results that exceeded Wall Street’s revenue and non-GAAP earnings expectations, supported by robust execution in both its Stormwater and Wastewater segments. Management credited the company’s performance to strong organic growth, the contribution from the NDS acquisition, and disciplined price management amid persistent cost inflation. CEO Scott Barbour highlighted the company’s diversified portfolio and material conversion initiatives as key factors, noting that “our diversified portfolio is working exactly as intended,” which helped offset weakness in certain residential markets.
Is now the time to buy WMS? Find out in our full research report (it’s free for active Edge members).
Advanced Drainage (WMS) Q2 CY2026 Highlights:
- Revenue: $1.00 billion vs analyst estimates of $981.5 million (20.6% year-on-year growth, 2% beat)
- Adjusted EPS: $2.49 vs analyst estimates of $2.12 (17.4% beat)
- Adjusted EBITDA: $358.3 million vs analyst estimates of $313.3 million (35.8% margin, 14.3% beat)
- The company reconfirmed its revenue guidance for the full year of $3.45 billion at the midpoint
- EBITDA guidance for the full year is $1.03 billion at the midpoint, in line with analyst expectations
- Operating Margin: 25.4%, in line with the same quarter last year
- Market Capitalization: $10.6 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Advanced Drainage’s Q2 Earnings Call
- Matthew Bouley (Barclays) asked about the expected cadence of EBITDA margins given shifting input costs. CFO Scott Cottrill explained that margins will fall sequentially in the next quarter, primarily due to resin and freight cost headwinds.
- Michael Halloran (Baird) probed for details on NDS integration and near-term facility improvements. CEO Scott Barbour described several facility projects nearing completion and outlined a plan to focus on automation and working capital initiatives over the next year.
- John Lovallo (UBS) questioned when lower input costs might flow through to results. Cottrill responded that resin costs will remain elevated through Q2 and Q3, with some moderation possible by year-end, while transportation costs will stay high.
- Jeffrey Reive (RBC Capital Markets) asked whether second quarter margins could fall below 30% given cost pressures and prebuy dynamics. Cottrill acknowledged margins will compress more than usual, but did not commit to a specific threshold.
- Collin Verron (Deutsche Bank) inquired about the pace of increasing recycled content and regulatory barriers. Barbour said the company aims to reach 50% recycled content “as fast as we can,” acknowledging some market-specific limitations.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the impact of resin and freight cost inflation on margins, (2) the pace and effectiveness of NDS integration and cross-selling initiatives, and (3) progress in scaling the Cordele recycling facility and increasing recycled content usage. Execution on these fronts will be key to sustaining profitability and supporting long-term growth.
Advanced Drainage currently trades at $140.46, down from $149.59 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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