As you saw in the press release, following the acquisition of NDS, we updated our reporting segments to Stormwater and Wastewater, as reflected in the results today. The Stormwater segment contains the legacy ADS business, pipe and Allied Products, as well as acquisitions we have made in the space, NDS, CULTEC, and River Valley Pipe. The Wastewater segment contains the legacy Infiltrator business as well as the acquisition of Orenco Systems. Stormwater revenue increased 12%, driven by a 43% increase in Allied Product sales, including the $49 million contribution from the NDS acquisition that closed February 2nd.
On an organic basis, Stormwater sales increased 2% overall, with a 12% growth in Allied Products. Once again, revenue in several highly profitable products grew double digits, including the StormTech retention/detention chambers, the Nyloplast capture structures, and our water quality product line. Pipe revenue decreased 2%, reflecting softness in the residential and infrastructure markets. Wastewater revenue increased 4% with strong activity in the Southeast and South.
We remain confident we have the right strategies and portfolio to increase our participation in the residential market as conditions inevitably improve. Moving to profitability, adjusted EBITDA increased 6% in the quarter, resulting in an adjusted EBITDA margin of 27.8%. This quarter's resilient margin is a reflection of the favorable growth, product mix, and price cost, as well as operational self-help initiatives and the capital invested over the last several years. Turning to the NDS integration, we are pleased with the progress made since closing the acquisition in February.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | Full fiscal year 2027 | $3.35 billion to $3.55 billion (approximately $3.45 billion at the midpoint), including approximately $300 million of revenue from NDS for the full year |
| Adjusted EBITDA | Full fiscal year 2027 | $1.0 billion to $1.5 billion |
| Organic / end-market volume | Full fiscal year 2027 | Roughly flat at the midpoint of the guide, with pricing taken to offset cost inflation on a dollar-for-dollar basis |
| Revenue seasonality (first half share) | Full fiscal year 2027 | Approximately 55% of revenue in the first half (management also cited the normal 55%-60% first-half range), with Q1 potentially elevated from pre-buying before normalizing in Q2 |
| Non-residential end market | Full fiscal year 2027 | Flat to up low single digits, driven by strength in large projects like data centers |
| SG&A as a percent of revenue | Full fiscal year 2027 | Approximately 14% |
| Working capital as a percent of sales | Full fiscal year 2027 | About 21% at end of fiscal 2027 due to inflationary cost pressures |
| NDS cost synergies | By year three | $25 million in annual cost synergies expected, with integration tracking ahead of the acquisition model |
| Metric | YoY | Note |
|---|---|---|
| Q4 total revenue | +10% to $677 million | Growth including the NDS acquisition contribution, with organic double-digit growth in Allied Products, tanks, and residential advanced treatment |
| Q4 Stormwater revenue | +12% (+2% organic) | 43% increase in Allied Product sales including a $49 million contribution from NDS, with double-digit growth in StormTech chambers, Nyloplast structures, and water quality products; partly offset by pipe down 2% |
| Q4 Wastewater revenue | +4% | Strong activity in the Southeast and South, double-digit tank growth from material conversion and expanded distribution, resilient leach field sales, and Orenco advanced treatment share gains |
| Q4 Allied Products (organic) | +12% (+43% including NDS) | New product introductions, ongoing customer programs, and broad-based U.S. growth from selling the complete package |
| Q4 Agriculture sales | +30% | Customers bought ahead of price increases |
| Q4 pipe revenue | -2% | Softness in the residential and infrastructure markets |
| Q4 residential end market | +18% (-1% excluding NDS) | NDS contribution offset an underlying decline as single-family housing faced affordability and interest rate headwinds; multifamily trends improving |
| Q4 non-residential (core) end market | +6% | Strength in the West and Midwest and broad-based Allied Products growth |
| Q4 adjusted EBITDA | +6%, margin 27.8% | Favorable growth, product mix, and price cost, plus operational self-help initiatives and capital invested over recent years |
| Full-year adjusted EBITDA margin | 31.6% (second highest in company history) | Self-help operational initiatives, high execution despite a challenging demand environment |
| Full-year non-residential market | +8% | Company significantly outperformed the market |
| Full-year residential market | +7% | Company significantly outperformed the market |
| Full-year free cash flow | $569 million vs $369 million prior year | Increased profitability and effective working capital management, plus a $35 million OBBBA benefit |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| NDS acquisition and integration | Closed the ~$1 billion NDS acquisition February 2nd, almost entirely with cash on hand | Integration tracking ahead of the acquisition model, strong cultural fit, $25 million cost synergies by year three reaffirmed, ~$300 million of NDS revenue expected in fiscal 2027, and growing excitement about revenue and cross-selling opportunities to be detailed at Investor Day | — |
| New segment reporting structure | Legacy Pipe/Allied and Infiltrator reporting | Reorganized into Stormwater (legacy ADS pipe and Allied, plus NDS, CULTEC, River Valley Pipe) and Wastewater (legacy Infiltrator plus Orenco) to better align with how the business is managed | — |
| Input cost inflation and price cost | Fourth consecutive quarter of volume growth and favorable price costs | Significant expected fiscal 2027 inflation on input materials and transportation, with pricing actions taken to offset dollar-for-dollar, which management acknowledges will be dilutive to margins as costs ramp | — |
| Recycled vs virgin resin | Fiscal 2026 saw a much friendlier virgin resin market, so ADS toggled toward virgin and ran recycled usage lower than normal | Toggling aggressively back to recycled resin (typically a 15%-20% cost benefit) faster than expected, with new Cordele, Georgia recycling capacity ramping next month and expanded Southeast recycling capacity underway | — |
| Logistics and internal fleet | — | Internal last-mile fleet covers roughly 70% of legacy ADS revenue and inflates only on diesel (not carrier rate), making ADS more competitive versus common-carrier-dependent competitors and potentially allowing an expanded delivery radius | — |
| Capital allocation and balance sheet | Conserved cash ahead of the NDS deal | Weighted average debt maturities extended to over six years (from two years prior), weighted average cost of debt lowered 30 bps to 5.65%, revolver increased to $750 million, leverage 1.6x with a below-2x target, and financial flexibility to pursue further strategic assets | — |
| Investor Day | — | Scheduled for June 18th in Hilliard, Ohio, to share the differentiated growth strategy, resilient profit platform, medium-term financial targets, and NDS cross-selling opportunities | — |
| Fiscal 2027 demand outlook | — | Overall demand similar to fiscal 2026 with a slightly more negative outlook on agriculture and single-family housing, non-residential flat to up low single digits driven by data centers, choppy order patterns, and a possible summer air pocket normalizing within the first half | — |