Material conversion remains an important driver and key component of our growth, and we continue to focus on innovation, new product introductions, strategic partnerships, distributor programs, and disciplined acquisitions to further differentiate the company. Finally, we remain committed to disciplined capital allocation, reinvesting opportunities that strengthen our competitive advantages, and create long-term shareholder value. Simply put, if we continue to grow faster than our markets, generate strong profitability and cash flow, and reinvest that capital wisely, we believe that's a winning formula for ADS and our shareholders. Shifting to the quarter, the first quarter results reflect strong performance as the team continued to execute well despite the tepid demand environment.
For the first time ever, we recorded over $1 billion in revenue this quarter, an increase of 21% versus the prior year. Organic revenue increased 9%, driven by growth across both the stormwater and wastewater segments. Adjusted EBITDA increased 29% to $358 million, resulting in an adjusted EBITDA margin of 35.8%, which is among the most profitable quarters in our history. We estimate there was approximately $25 million-$30 million of revenue pulled into the first quarter from the second as customers tried to get ahead of price increases.
Ultimately, we expect the first half of the year to have normal seasonality, representing 55%-60% of revenue. However, the normal first and second quarter revenue patterns will be affected by this pull ahead. If you take the $95 million of revenue from NDS and assume approximately $25 million-$30 million was pulled forward, we still reported strong mid-single digit organic growth. Sales in the non-residential market were strong, increasing 14% on an organic basis.
| Metric | Period | Current guidance |
|---|---|---|
| Net sales | FY2027 (full year) | $3.35 billion-$3.55 billion (reaffirmed) |
| Adjusted EBITDA | FY2027 (full year) | $1.0 billion-$1.05 billion (reaffirmed) |
| Capital expenditures | FY2027 (full year) | Approximately $200 million to close out the Cordele expansion and invest in automation and additional capacity at Infiltrator |
| First-half revenue mix (seasonality) | FY2027 first half | 55%-60% of full-year revenue in the first half |
| Price-cost recovery | FY2027 (full year) | Pricing initiatives expected to offset inflationary cost pressure on a dollar-for-dollar basis |
| Metric | YoY | Note |
|---|---|---|
| Net sales | +21% to over $1 billion | Organic growth of 9% across stormwater and wastewater plus the contribution of the NDS acquisition; adjusting for the pull-ahead, organic growth was mid-single digits |
| Adjusted EBITDA | +29% to $358 million | Strong organic volume growth, the NDS contribution, the $25M-$30M pull-ahead, and favorable price-cost timing from implementing pricing ahead of higher material costs and rolling favorably priced prior-year inventory |
| Adjusted EBITDA margin | +230 bps to 35.8% (from 33.5%) | Favorable price cost, disciplined price-cost management, material conversion, and operational execution; second highest margin quarter in company history |
| Stormwater revenue | +24% to $809 million (from $652 million); +10% organic | Growth in both pipe and Allied Products, aided by non-residential strength and the pull-ahead |
| Wastewater revenue | +8% | Double-digit growth in both tanks and residential advanced treatment, expanded distribution, and market-leading advanced treatment products, outperforming the underlying residential market |
| Non-residential market sales | +14% organic | Resilient commercial construction and large projects including data centers and warehouses; Allied Products storage category grew 18% |
| Residential market sales | +29% (flat organically) | Increase primarily driven by NDS; Infiltrator residential revenue up double digits on tanks and advanced treatment, offset by weakness in stormwater retail and residential land development |
| Free cash flow | $203 million | Earnings performance and disciplined working capital management |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Price-cost management | Pricing put into the market 30-45 days ahead of resin cost increases; Q1 benefited from favorable resin costs and favorably priced prior-year inventory | Resin costs flip to a significant headwind peaking in Q2/Q3, still elevated in Q4; pricing from Q1 continues into Q2 with dollar-for-dollar offset for the full year | — |
| NDS acquisition and integration | Acquisition closed and integration began in February (first six months) | $95 million of revenue this quarter (its seasonally highest quarter), growing year-over-year; integration progressing well with facility work largely complete this calendar year and automation and cross-selling trials beginning | — |
| Recycled material strategy | Recycled content accelerated in late February as raw material costs rose; took ~10 years to reach 50% recycled content historically | Cordele, Georgia recycling facility expansion nearing completion and already contributing to cost mitigation; pivoting back toward 50% recycled HDPE, will reach full Cordele capacity next fiscal year | — |
| Transportation costs | — | Significantly elevated on higher diesel and common carrier costs; mitigated by internal fleet (70%-75%+ of shipments), diesel hedging program, and route planning; will remain elevated all year | — |
| Capital allocation | — | Bought back a large slug of stock (~9.5 million shares) amid market dislocation; ~$250 million returned to shareholders including dividend in Q1; net leverage ~1.5x versus 2.0x target, leaving firepower for acquisitions and buybacks | — |
| Advanced treatment and engineered systems | — | Advanced treatment continued double-digit growth aided by Orenco-Infiltrator synergies and the new Edge product launch; engineered systems a small but growing segment ADS is investing in across Louisiana and Oregon | — |