Collin Merano's questions to Advanced Drainage Systems Inc (WMS) leadership • Q4 2025
Question
Collin Merano asked for more detail on manufacturing and transportation cost trends for fiscal 2026 and inquired about the free cash flow outlook given the planned step-up in capital expenditures.
Answer
CEO Scott Barbour explained that transportation costs will benefit from logistics planning and a refreshed, more efficient fleet. The unfavorable manufacturing cost in Q1 is a timing issue due to the under-absorption from lower production in the prior quarter hitting the P&L, a situation that should reverse later in the year. An executive stated the company targets free cash flow conversion of over 40% of adjusted EBITDA and cash flow from operations over 65%, even with higher CapEx, which is prioritized for high-return areas like Infiltrator and Allied products.