ADS Cuts FY2027 Sales Outlook After Lower-Than-Expected Material Inflation

Advanced Drainage Systems lowered its fiscal 2027 net sales outlook Thursday, Nov. 5, after material inflation came in below the level anticipated in its earlier forecast, reducing planned price increases. The revised sales midpoint is $100 million below the previous midpoint, while the adjusted EBITDA midpoint is down $10 million.

The company now forecasts net sales of $3.3 billion to $3.4 billion for fiscal 2027, compared with $3.35 billion to $3.55 billion previously. That puts the new sales midpoint at $3.35 billion, down 2.9% from the old midpoint of $3.45 billion. ADS expects adjusted EBITDA, a non-GAAP earnings measure, of $1 billion to $1.03 billion, versus $1 billion to $1.05 billion before. The updated midpoint is $1.015 billion, about 1% below the earlier $1.025 billion midpoint. ADS also expects capital spending of about $200 million. Its fiscal 2027 runs from April 1, 2026, through March 31, 2027.

ADS makes products for stormwater and onsite wastewater management. President and CEO Scott Barbour described demand as softer than when the company first issued guidance in May, pointing to higher interest rates and ongoing geopolitical uncertainty.

For the fiscal second quarter ended Sept. 30, net sales rose 4.6% from a year earlier to $889.4 million. Adjusted EBITDA slipped 0.2% to $286.8 million, while net income from continuing operations fell 14.6% to $133.6 million.

For the first six months of fiscal 2027, sales increased 12.5% to $1.89 billion, and adjusted EBITDA rose 14% to $645.1 million. Organic sales for the six-month period grew 2.3%.

ADS announced its proposed StormTrap purchase on Oct. 5 for about $530 million, or about $450 million after accounting for the present value of expected tax benefits. StormTrap provides high-volume stormwater storage systems for sites with limited space. For the 12 months ended July 2026, it had revenue of about $165 million and adjusted EBITDA of about $40 million. ADS expects the acquisition to close in the fourth quarter of calendar 2026, pending customary closing conditions, including required regulatory approvals.