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Advanced Drainage Systems Q2 sales miss estimates on soft demand

By Reuters News


Overview

  • US water management firm's fiscal Q2 sales rose 4.6% but missed analyst expectations

  • Adjusted EPS for fiscal Q2 beat analyst expectations

  • Company repurchased $375.1 mln of stock and announced proposed StormTrap acquisition


Outlook

  • Company lowers fiscal 2027 net sales outlook to $3.3 bln-$3.4 bln

  • Company maintains fiscal 2027 Adjusted EBITDA outlook at $1.0 bln-$1.03 bln

  • Company expects lower inflationary pressure on materials to continue in second half


Result Drivers

  • NDS ACQUISITION - Co said Q2 sales and gross profit were boosted by the acquisition of National Diversified Sales (NDS)

  • PRICE/COST MANAGEMENT - Favorable price/cost more than offset unfavorable volume and transportation costs, supporting profitability

  • SOFT DEMAND - Co said demand environment was softer than expected, citing higher interest rates and geopolitical uncertainty


Company press release:


Key Details

Metric

Beat/Miss

Actual

Consensus Estimate

Q2 Sales

Miss

$889.41 mln

$933.62 mln (11 Analysts)

Q2 Adjusted EPS

Beat

$1.88

$1.84 (8 Analysts)

Q2 EPS

$1.77

Q2 Net Income

$110.10 mln

Q2 Adjusted EBITDA

Slight Beat*

$286.80 mln

$285.38 mln (11 Analysts)

*Applies to a deviation of less than 1%; not applicable for per-share numbers.


Analyst Coverage

  • The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 12 "strong buy" or "buy", no "hold" and no "sell" or "strong sell"

  • The average consensus recommendation for the construction supplies & fixtures peer group is "buy"

  • Wall Street's median 12-month price target for Advanced Drainage Systems Inc is $178.00, about 23.6% above its November 4 closing price of $144.07

  • The stock recently traded at 21 times the next 12-month earnings vs. a P/E of 21 three months ago


Reuters Recommended Reads

  • Nov 3 - Door and window maker JELD-WEN's Q3 revenue falls slightly more than expected on lower volumes

  • Nov 4 - Trex Q3 net sales rise 26% on volumes, adjusted EPS beats estimates

  • Nov 3 - Fortune Brands Q3 revenue misses estimates on execution issues


For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.


(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)

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