Advanced Drainage Systems WMS

NYSE WMS

$127.88 +0.72 (+0.57%)

As of: Sep 11, 2026 · 3:59 PM EDT

Key Stats

Market Cap9.81 Bn

P/E21.71

P/S3.04

Div. Yield0.01

Total Debt (Qtr)1.61 Bn

Revenue Growth (1y) (Qtr)20.63

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About

Advanced Drainage Systems Inc is a leading manufacturer of innovative water management solutions in the stormwater and onsite septic wastewater industries providing superior drainage solutions for use in the construction and agriculture marketplaces. The company manages the lifecycle of a raindrop from capture conveyance storage and treatment offering products that safely and efficiently handle stormwater and wastewater. Its product portfolio serves residential non…

The company generates revenue by designing manufacturing and marketing a wide range of thermoplastic corrugated pipe and related water management products. Its offerings include single double and triple wall corrugated polypropylene and polyethylene pipe for drainage and sewer applications plastic leachfield chambers and synthetic aggregate systems septic tanks and advanced treatment units storm retention detention chambers polyvinyl chloride drainage structures fittings water quality filters and geotextile products. In fiscal 2025 the Pipe segment represented approximately 51.8 percent of net sales the Infiltrator segment 17.8 percent the International segment 6.7 percent and Allied Products & Other 23.8 percent. Revenue is derived primarily from sales to distributors contractors municipalities and agricultural users across North America and selected international markets.

The company operates through the following segments: Pipe Infiltrator International and Allied Products & Other.

The Pipe segment produces and sells single double and triple wall corrugated polypropylene and polyethylene pipe including N 12 HP Storm and SaniTite HP products for storm sewer drainage agricultural and construction applications.
The Infiltrator segment designs and manufactures plastic leachfield chambers such as Quick4 Quick5 and ARC models synthetic aggregate leachfields like EZflow combined treatment and dispersal systems including AES ES ATL and AeroFin septic tanks such as IM Series and CM Series advanced treatment systems for residential and commercial use and general onsite products plus Orenco Controls and Orenco Composites offerings.
The International segment comprises manufacturing facilities in Canada joint venture operations in Mexico Central America and South America that produce pipe and related products and wholly owned subsidiaries that distribute the companys offerings in Europe and the Middle East.
The Allied Products & Other segment offers storm retention detention chambers polyvinyl chloride drainage structures fittings water quality filters and separators geotextile products Inserta Tee adapters and other complementary items sourced through resale agreements.

Advanced Drainage Systems Inc holds a leading position in the fragmented water management industry competing against concrete pipe corrugated steel pipe PVC pipe producers and other HDPE pipe manufacturers while leveraging its national sales and distribution platform broad product line engineering support and manufacturing scale to maintain competitive advantages in product availability cost effectiveness ease of installation and technical expertise. The company benefits from a long history of innovation a strong brand identified by its green stripe and a commitment to sustainability through extensive recycling of high density polyethylene and polypropylene resins.

The company serves a diverse customer base of approximately 16000 customers including major distributors Ferguson Enterprises and Core & Main Inc which accounted for 14.3 percent and 12.7 percent of fiscal 2025 net sales respectively as well as national retailers buying groups cooperatives and numerous contractors municipalities agricultural operators and infrastructure developers across the United States Canada Mexico and selected international markets.

Investment Thesis

▲ Bull case

The company has successfully integrated the NDS acquisition and is already ahead of the synergy schedule which suggests that cost savings and revenue cross selling will materialize faster than anticipated. Management indicated that in the first year of the three year plan they are well ahead of the expected ramp indicating that the 25 million dollar annual cost synergy target by year three could be reached earlier. This acceleration would improve adjusted EBITDA margins beyond the guided range and provide additional free cash flow for shareholder returns or reinvestment. The early realization of synergies also reduces integration risk and enhances confidence in the long term growth platform.
The recycling capability provides a structural cost advantage that is being actively expanded in the Southeast United States allowing the firm to shift toward lower cost recycled resin when virgin material prices rise. This operational lever not only mitigates input cost inflation but also improves gross profit margins without relying solely on price increases. The ability to toggle between virgin and recycled inputs quickly gives the company a competitive edge over peers that lack similar scale in plastic recycling. Over the long term this capability supports sustained margin expansion and protects cash flow during periods of raw material volatility.
Strong demand from data center construction and other large scale nonresidential projects is providing a resilient revenue base that is less sensitive to residential housing cycles. Management highlighted that the nonresidential market is expected to be flat to up low single digits but noted that activity in large projects such as data centers is driving strength. The company’s solutions package installation benefits and national logistics network position it to capture a larger share of stormwater infrastructure for these high growth projects. This focus on data centers and infrastructure creates a durable growth channel that can offset softness in the residential and agricultural end markets.
The multifamily housing segment is showing improving trends and the Infiltrator core residential business continues to outperform the broader market due to new products and expanded distribution partners. This dynamic suggests that as overall residential conditions improve the company is positioned to gain additional share beyond the current outperformance. The combination of new product introductions cross selling opportunities with NDS and a focused sales effort on large national and regional homebuilders creates a clear pathway for accelerated residential growth. Capturing this upside would add to overall revenue growth and improve the product mix toward higher margin offerings.

The company has successfully integrated the NDS acquisition and is already ahead of the synergy schedule which suggests that cost savings and revenue cross selling will materialize faster than anticipated. Management indicated that in the first year of the three year plan they are well ahead of the expected ramp indicating that the 25 million dollar annual cost synergy target by year three could be reached earlier. This acceleration would improve adjusted EBITDA margins beyond the guided range and provide additional free cash flow for shareholder returns or reinvestment. The early realization of synergies also reduces integration risk and enhances confidence in the long term growth platform.
The recycling capability provides a structural cost advantage that is being actively expanded in the Southeast United States allowing the firm to shift toward lower cost recycled resin when virgin material prices rise. This operational lever not only mitigates input cost inflation but also improves gross profit margins without relying solely on price increases. The ability to toggle between virgin and recycled inputs quickly gives the company a competitive edge over peers that lack similar scale in plastic recycling. Over the long term this capability supports sustained margin expansion and protects cash flow during periods of raw material volatility.
Strong demand from data center construction and other large scale nonresidential projects is providing a resilient revenue base that is less sensitive to residential housing cycles. Management highlighted that the nonresidential market is expected to be flat to up low single digits but noted that activity in large projects such as data centers is driving strength. The company’s solutions package installation benefits and national logistics network position it to capture a larger share of stormwater infrastructure for these high growth projects. This focus on data centers and infrastructure creates a durable growth channel that can offset softness in the residential and agricultural end markets.
The multifamily housing segment is showing improving trends and the Infiltrator core residential business continues to outperform the broader market due to new products and expanded distribution partners. This dynamic suggests that as overall residential conditions improve the company is positioned to gain additional share beyond the current outperformance. The combination of new product introductions cross selling opportunities with NDS and a focused sales effort on large national and regional homebuilders creates a clear pathway for accelerated residential growth. Capturing this upside would add to overall revenue growth and improve the product mix toward higher margin offerings.

▼ Bear case

The guidance assumes flat volume and relies on pricing actions to offset input cost inflation which creates margin pressure if the company cannot fully pass through cost increases. Management acknowledged that matching pricing to volatile diesel and transportation costs is difficult and that gross margin may experience temporary compression. This reliance on dollar for dollar pricing leaves the business vulnerable to any lag in price realization or to competitive pressure that limits price increases. If inflation persists longer than expected the adjusted EBITDA margin could fall below the guided range pressuring earnings and free cash flow generation.
The residential pipe market continues to face headwinds from affordability concerns interest rate dynamics and geopolitical uncertainty which could suppress demand beyond the expected air pocket from prebuying ahead of price increases. Management noted that excluding NDS residential sales actually decreased 1% in the quarter indicating underlying weakness in the core residential pipe business. A prolonged downturn in single family housing would limit growth opportunities for the Infiltrator business and reduce the benefit of cross selling with NDS products. This structural weakness in a key end market could weigh on overall revenue growth and limit upside to the guidance.
Working capital is expected to rise as inventory costs and receivables increase with inflation pushing the leverage ratio toward the upper end of management’s comfort zone. The company disclosed that working capital as a% of sales is projected to increase from below 20% to about 21% by the end of fiscal 2027. Higher working capital consumption reduces free cash flow conversion and could limit the ability to sustain share repurchases or dividend growth without additional borrowing. This dynamic may constrain financial flexibility especially if earnings are pressured by margin challenges.
Competitive intensity from concrete pipe manufacturers may increase in regions where the company’s value proposition is compressed due to inflationary cost pressures on plastic materials. While management believes this is a temporary dynamic any prolonged shift toward concrete could erode market share in the stormwater segment and limit the ability to achieve pricing goals. The reliance on internal fleet advantages and recycling to mitigate cost inflation may not be sufficient if competitors also adopt similar strategies or if concrete pricing remains more stable. This competitive risk adds uncertainty to the company’s ability to maintain or grow its market share in key geographic markets.

The guidance assumes flat volume and relies on pricing actions to offset input cost inflation which creates margin pressure if the company cannot fully pass through cost increases. Management acknowledged that matching pricing to volatile diesel and transportation costs is difficult and that gross margin may experience temporary compression. This reliance on dollar for dollar pricing leaves the business vulnerable to any lag in price realization or to competitive pressure that limits price increases. If inflation persists longer than expected the adjusted EBITDA margin could fall below the guided range pressuring earnings and free cash flow generation.
The residential pipe market continues to face headwinds from affordability concerns interest rate dynamics and geopolitical uncertainty which could suppress demand beyond the expected air pocket from prebuying ahead of price increases. Management noted that excluding NDS residential sales actually decreased 1% in the quarter indicating underlying weakness in the core residential pipe business. A prolonged downturn in single family housing would limit growth opportunities for the Infiltrator business and reduce the benefit of cross selling with NDS products. This structural weakness in a key end market could weigh on overall revenue growth and limit upside to the guidance.
Working capital is expected to rise as inventory costs and receivables increase with inflation pushing the leverage ratio toward the upper end of management’s comfort zone. The company disclosed that working capital as a% of sales is projected to increase from below 20% to about 21% by the end of fiscal 2027. Higher working capital consumption reduces free cash flow conversion and could limit the ability to sustain share repurchases or dividend growth without additional borrowing. This dynamic may constrain financial flexibility especially if earnings are pressured by margin challenges.
Competitive intensity from concrete pipe manufacturers may increase in regions where the company’s value proposition is compressed due to inflationary cost pressures on plastic materials. While management believes this is a temporary dynamic any prolonged shift toward concrete could erode market share in the stormwater segment and limit the ability to achieve pricing goals. The reliance on internal fleet advantages and recycling to mitigate cost inflation may not be sufficient if competitors also adopt similar strategies or if concrete pricing remains more stable. This competitive risk adds uncertainty to the company’s ability to maintain or grow its market share in key geographic markets.

Segments Breakdown of Revenue (2026)

Peer group

Peer Comparison

Companies in the Building Products

S.No.	Ticker	Company	match	Market Cap	P/E	P/S	Total Debt (Qtr)
1	OTIS	Otis Worldwide Corp	primary	26.47 Bn	16.77	1.78	9.62 Bn
2	JHIUF	James Hardie Industries plc	primary	17.99 Bn	122.13	3.33	4.32 Bn
3	MAS	Masco Corp /De/	primary	13.66 Bn	14.58	1.79	3.25 Bn
4	CSL	Carlisle Companies Inc	primary	13.44 Bn	18.54	2.64	2.89 Bn
5	ALLE	Allegion plc	primary	13.11 Bn	19.90	3.06	2.03 Bn
6	OC	Owens Corning	primary	10.58 Bn	-15.84	1.07	6.13 Bn
7	WMS	Advanced Drainage Systems, Inc.	primary	9.81 Bn	21.71	3.04	1.61 Bn
8	AYI	Acuity Inc. (De)	primary	9.66 Bn	20.45	2.10	0.70 Bn

Advanced Drainage Systems WMS

About

Investment Thesis

Geographical Breakdown of Revenue (2026)

Segments Breakdown of Revenue (2026)

Peer Comparison

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