Advanced Drainage Systems, Inc (NYSE: WMS) Q1 2026 Earnings Call dated Aug. 07, 2025
Corporate Participants:
Michael Higgins — Vice President, Corporate Strategy and Investor Relations
D. Scott Barbour — President and Chief Executive Officer
Scott Cottrill — Executive Vice President, Chief Financial Officer and Secretary
Analysts:
Bryan Blair — Analyst
Matthew Bouley — Analyst
John Lovallo — Analyst
Ethan — Analyst
Unidentified Participant
David Tarantino — Analyst
Mike Halloran — Analyst
Presentation:
Operator
Good morning, ladies and gentlemen, and welcome to Advanced Drainage Systems’ First Quarter of Fiscal Year 2026 Results Conference Call. My name is Tamika, and I am your operator for today’s call. [Operator Instructions]
I would now like to turn the presentation over to your host for today’s call, Mr. Mike Higgins, Vice President of Corporate Strategy and Investor Relations. Sir, you may begin.
Michael Higgins — Vice President, Corporate Strategy and Investor Relations
Good morning, everyone. With me today, I have Scott Barbour, our President and CEO; and Scott Cottrill, our CFO.
I would also like to remind you that we will discuss forward-looking statements. Actual results may differ materially from those forward-looking statements because of various factors, including those discussed in our press release and the risk factors identified in our Form 10-K filed with the SEC. While we may update forward-looking statements in the future, we disclaim any obligation to do so. You should not place undue reliance on these forward-looking statements, all of which speak only as of today. Lastly, the press release we issued earlier this morning is posted on the Investor Relations section of our website. A copy of the release has also been included in an 8-K submitted to the SEC. We will make a replay of this conference call available via webcast on the company website.
With all that said, I now will turn the call over to Scott Barbour.
D. Scott Barbour — President and Chief Executive Officer
Thank you, Mike, and good morning, everyone. Thank you all for joining us on today’s call.
We generated strong results in the first quarter, delivering a resilient 33.5% adjusted EBITDA margin despite a challenging market environment. The ADS and Infiltrator teams executed well and remain focused on driving profitable growth and operational excellence by executing our market-share model, introducing new products, pursuing acquisitions, and investing capital for long-term growth. Revenue increased 2% overall, primarily driven by the Orenco acquisition. Organic sales were down slightly, though our core non-residential and residential end-markets were resilient in the quarter. Importantly, Allied Products and Infiltrator, which are two of our higher-margin categories, increased revenue in the quarter.
We continue to build on the strong foundation of the ADS story. We operate in highly attractive water segments, supported by secular tailwinds from changing climate patterns as well as the increasing awareness of the societal value of proper storm water and on-site wastewater management, ultimately driving long-term demand for the Company’s products.
ADS is the only company with solutions that extend throughout the entire stormwater system on a national scale. Through our best-in-class portfolio of water management products, we deliver solutions that are safer, faster to install, and lower costs through savings on labor and equipment. To meet the needs of our customers and communities, we continue to bring innovative solutions to the market that expand and evolve our product offering.
In June, ADS launched the Arcadia hydrodynamic separator, a high-performance water quality separator product designed to remove suspended solids. With industry-leading performance, this product addresses the need to protect water resources from pollution. This product comes on the heels of the new stormwater treatment solution, the EcoStream biofiltration product launched in the latter half of fiscal 2025. Both of these water quality products are designed to remove pollutants such as nitrogen, phosphorus, sediments, metals, and hydrocarbons in different applications.
Water quality remains a key growth area for ADS, and this category has grown at a high-teens CAGR over the last three years as regulations requiring stormwater treatment continue to evolve. Our new engineering and technology center, equipped with a 90,000-gallon closed-loop hydraulics lab, allowed us to test and commercialize these products more quickly than was previously possible. For context, that is the amount of water used by the average U.S. household over the course of two and a half years. This lab has the capacity to move water at 2,300 gallons per minute, and compare that to the water pressure in your average kitchen sink of 2 to 3 gallons per minute, and it will give you an idea of the capability of our new engineering and technology center.
Additionally, demand in the advanced treatment market is also a key focus area, and we are pleased with Orenco’s strong start to the year, with growth in commercial applications as well as controls. Orenco’s performance was a significant contributor to driving Infiltrators’ 21% growth this quarter, complemented by double-digit organic growth in on-site wastewater tanks, where conversion to plastic remains highly relevant.
Domestic allied product sales increased 1%, driven by demand in the multifamily residential market, where we experienced double-digit growth of key products like retention detention chambers, water quality products, and our stormwater capture structures. More broadly, residential market demand was highly variable depending on geography and application. While multifamily construction improved, single-family housing continues to be impacted by the interest-rate environment and affordability constraints. From a geographic lens, we saw better land development activity in the West and Northeast, but the DIY channel we serve through service through big-box retailers was challenged.
Infiltrator core products, both leach field chambers and septic tanks, significantly outperformed the market. We will continue to drive growth through product introductions and material conversion opportunities, while also building on the relationships with the large national and regional homebuilders to drive above-market growth in residential construction.
In the non-residential market, growth was driven by acquisitions and strong execution from our sales team, particularly in commercial construction activity in the Midwest, Atlantic Coast, South, and Southeastern United States. We continue to see good activity in data centers and large projects, and believe that underlying demand in key geographies was impacted by heavy rainfall and high temperatures, particularly in May and June.
With respect to infrastructure, despite revenue being down this quarter compared to the prior year, it was actually the third-highest revenue quarter in the Company’s history. As a reminder, this segment is more concentrated in geographies where we have stronger approvals, and often, large projects like airports can make quarterly performance uneven. That said, over the long term, the demand drivers remain strong. Over 50% of the IIJA’s highway and street funds will be spent over the next five years, so we continue to feel good about the overall direction of the infrastructure market.
Moving to profitability, this quarter’s 33.5% adjusted EBITDA margin is among the highest in the Company’s history despite a challenging demand environment. Excluding Orenco, the consolidated margin would have been 34.1%. Importantly, overall pricing remains stable sequentially as expected. Price-cost was favorable in the quarter, benefiting from favorable material costs as well as product mix.
Manufacturing costs were unfavorable as expected due to the fixed-cost absorption on inventory produced over the winter months. We were able to offset a portion of that with favorable transportation costs driven by the better performance of new assets and implementation of new programs. Also of note, we recently began to wind down operations at a distribution yard and a small pipe manufacturing operation. With the capacity investments in the region and the acquisition of River Valley Pipe, we were able to eliminate some inefficient production while also improving our customer service and delivery.
Over the last year, we have taken fixed costs out of the ADS network by closing two pipe production operations, a recycling facility, and three distribution yards without compromising any customer service. We can do this because of the investments we’ve made in new lines, rebuilds, and the planning programs implemented over the last several years. To illustrate this point, on average, ADS production per line increased by over 20% compared to pre-COVID levels, and the strategic capital invested over the last several years has allowed us to remove inefficient equipment from the network.
I’m very proud of the team for the performance delivered in a challenging quarter. Their disciplined execution and commitment to continuous improvement resulted in our safest quarter ever, achieving a record-low total recordable incident rate below 1.5 compared to an industry average of 3.2. These achievements reflect our ongoing focus on operational excellence and safety, which are foundational elements of our sustainable growth strategy. When you stack up our strengths, the scale, the product portfolio, our go-to-market strategy, and the ability to invest in both our businesses, our people, and industry growth, you can see ADS as a powerful value proposition.
In summary, we continue to execute effectively in a challenging environment, preserving strong margin and enhancing our mix towards more profitable products in geographies. Our self-help operational initiatives are now bearing fruit. We’ve increased the capacity of the existing production lines and added new ones in strategic areas to meet customer demand. We’ve also upgraded the service and delivery experience for our customers, leveraging new digital tools across our platform.
While we navigate the near-term environment, we do so with an eye towards the future. We remain firmly committed to our long-term vision, and we’ll continue investing in the capabilities that will position us for future success. Overall, that long-term outlook for our business remains strong, supported by compelling secular tailwinds driving demand for water management solutions across the U.S.
Now, I’ll turn the call over to Scott Cottrill.
Scott Cottrill — Executive Vice President, Chief Financial Officer and Secretary
Thanks, Scott. On Slide 5, we present our first-quarter fiscal 2026 financial performance. Revenue increased 2% to $830 million despite challenging end-market demand. Importantly, we believe our results outpaced our end-markets overall, demonstrating the resilience of the ADS business model.
As Scott noted, from a profitability perspective, we are very pleased with the 33.5% adjusted EBITDA margin in the first quarter. A couple of things I feel are worth reiterating. First, pricing remained stable sequentially as we had indicated and expected. Second, price-cost was favorable year-over-year. From a manufacturing perspective, while we did experience unfavorable fixed-cost absorption during the quarter, we were able to partially offset such with favorable transportation as well as favorable variable manufacturing cost performance.
Regarding SG&A costs, the year-over-year increase was primarily driven by the acquisition of Orenco, as well as continued investments in areas that drive long-term shareholder value, such as resources and talent at our world-class engineering and technology center. We have worked to offset these increases by containing costs in travel, marketing, and other discretionary expenses. Again, despite choppy end-market demand, it is important to highlight the Company’s performance and the resulting 33.5% EBITDA margin, one of the highest margins in the Company’s history, despite end-market weakness, demonstrated the continued resilience of the ADS business model.
On Slide 6, we present our free cash flow for the quarter. We generated $222 million of free cash flow year-to-date compared to $126 million in the prior year, primarily driven by better working capital performance. Of note, we expect the OBBA to result in an incremental $30 million to $40 million of free cash flow this fiscal year.
Thoughtful capital allocation continues to be a key focus for the management team and our Board, given the strong cash generation of this business. We spent $53 million on capital expenditures in the first quarter and we now expect to spend approximately $200 million to $225 million for the full-year, focusing on innovation and product development at the new world-class engineering and technology center, as well as increasing our recycling capacity in the Southeast, continued investment in customer service, productivity and automation, as well as executing on growth in key geographies.
We ended the quarter with less than one turn of net leverage and over $1.2 billion in available liquidity, including $638 million of cash-on-hand. This level of financial strength gives us exceptional flexibility to invest with conviction and respond quickly to strategic opportunities as they arise. Our capital allocation priorities remain focused on value-creation levers such as capital expenditures, innovation, and acquisitions.
Moving on to Slide 7. While pleased with our performance in Q1, given the continued uncertain demand environment, our guidance ranges remain unchanged. We remain focused on executing our long-term strategic plan to drive consistent long-term growth, margin expansion, and free cash flow generation.
With that, I will open the call for questions. Operator, please open the line.
Questions and Answers:
Operator
[Operator Instructions] Your first question is from the line of Bryan Blair with Oppenheimer.
Bryan Blair
Thank you. Good morning, guys.
D. Scott Barbour
Good morning.
Bryan Blair
Yeah, very solid start to the year. I guess to level-set on Q1 outperformance, can you estimate the impact of weather in terms of project delays and remind us of the EV comp dynamics from Q1 ’25? In the end, I guess, I’m just trying to get to the net impact of Q1 ’26 deferrals versus the prior year project timing.
D. Scott Barbour
Okay. Good morning, Brian. This is Scott B. You know, the unpacking of how things are moving because of the weather. I mean, that’s kind of how I interpret your question, and I do think that early in the first quarter, May — April-May, you know, some things were moving around by weeks, you know, delayed two, three, four, or five weeks. So, stuff certainly moved around between the fourth quarter of last year and this quarter. Some stuff moved into this quarter. I’m not sure that it was, you know, hugely detrimental to us because it’s just as a delay. The stuff kind of comes back. And if I recall correctly, you know, last year was there’s probably some stuff pulled into the quarter.
Scott Cottrill
Yeah. Brian, I would say last year, we — it was probably $15 million to $20 million when you look at the kind of favorable impact that happened in Q4 that was stolen from Q1. So that would kind of be there. I would agree with Scott. Things kind of moved around in the quarter, but kind of even that kind of evened out, right? And as we get through July and August, we think it’s kind of a normal run-rate assuming no other significant weather events at the late stage.
D. Scott Barbour
And I guess what I’m trying to really always suss out of these situations is, demand overall is just kind of tepid. It’s very regional. And as things — as weather moves them back-and-forth a little bit, we’ve got to be careful not to get too excited when stuff kind of moves around by a couple of weeks or from one month to the next. Our overall view of the demand is, it’s rather flattish and tepid. So when we can grow in residential and non-residential, these very core markets across both the Infiltrator and the ADS platform, we feel like we’re doing pretty good and more than holding serve in our key markets and geographies.
Bryan Blair
Absolutely. That seems to be the case. I appreciate the color there. Price-cost always keen focus and turned positive a little earlier than anticipated. I guess, given price stability — continued sequential stability, anticipated mix, current visibility on input cost, what does your team expect for Q2 price cost, and is there any shift to the neutral full-year impact that you’ve baked into that?
D. Scott Barbour
Yeah. Now, let’s start with the last part of that first. So, price cost for the year, still expected to be flat, and then again, a little bit favorable versus our expectation in the first quarter, as you indicated. But again, remember, last year, kind of we didn’t have the pricing impact until our fiscal second quarter, so again, a little bit of pricing that we had to deal with on a year-over-year basis in that first quarter. But we lag in the second quarter, so that will be something as you look at that progression from Q1 to Q2 and then through the remainder of the year. But again, sequentially, pricing has remained relatively flat, like we’ve been talking about. So that’s very good.
Operator
Your next question is from the line of Matthew Bouley with Barclays.
Matthew Bouley
Good morning, everyone. Thank you for taking the questions. I wanted to start on capex. I think the guide was reduced from $275 million to that $200 million to $225 million. So I just wanted to check on if anything has changed around the capital projects you’re planning to invest in this year. This is just timing, or if we should kind of read any implications to share repurchase, or potentially a little bit more dry powder for M&A? Thank you.
D. Scott Barbour
Yeah, Matt. Scott here. It’s just timing. Some of the larger projects we had are just moving to the right a little bit, and again, doesn’t impact our ability to meet our anticipated demand. Scott hit on the efficiencies and productivity, and some of the other things that we’ve done strategically to meet the demand in certain regions. So it’s just all — it’s timing.
Matthew Bouley
Okay. Got it. Thanks, Scott. And then secondly, on Infiltrator, you know that organic growth of nearly 1%. Obviously, the residential end-market is fairly choppy here in terms of starts. I think I heard you mention that you saw double-digit organic growth in onsite wastewater. So I guess I was wondering if you could expand on that a little bit and how that plays into your outlook? And could we expect to see that on-site wastewater side of it, perhaps offsetting this residential backdrop here? Thank you.
D. Scott Barbour
So this is Scott B., and Craig is here with us today, too, from Infiltrator. And it’s tanks. It’s tanks that continue to gain share and grow through new distribution points, new models that we introduced over the last 18 months tooled and introduced over the last 18 months. And in the core leach field, I think that we are in the right spot where our — the types of plate homes or geographies that are — that use our products to have on-site wastewater treatment are kind of higher mix towards that, versus municipal there. So we continue to do really great work there in new products, running our programs through the distribution, and again, just executing well in Winchester, Kentucky; they’re a very nice facility.
Operator
Your next question is from the line of John Lovallo with UBS.
John Lovallo
Good morning, guys. Thanks for taking my questions as well. I wanted to ask about the last quarter, you talked about the first quarter perhaps being the softest margin, given pricing dynamics, and also the worst fixed-cost absorption. So curious if that still stands. I mean, it doesn’t seem like the outlook would imply that, but is there any change in the cadence of how you’re looking at the margins through the year?
D. Scott Barbour
John, this is Scott B. Scott C. wants to talk, I can tell also, but we worked our tail off to try to offset what we saw as really poor absorption through the winter months, flushing out in our first fiscal quarter. So we worked very hard in other areas that were period cost and particularly in transportation and logistics, to make that a better story than we anticipated.
Does it inform — you know the rest of the year, we’re not changing our guide. It’s just the first quarter. We’re honestly more worried about demand than we are our ability to perform on cost or resin and stuff like that. So that’s why we’re cautious. I mean, I use this word tepid around demand, and I really — we just don’t want to get ahead of ourselves there. So that’s how we’re thinking about. Scott, you want to add anything to that?
Scott Cottrill
No, you nailed it.
D. Scott Barbour
Perfect.
John Lovallo
Okay. No, that makes a lot of sense. And then it looks like you guys didn’t buy back any stock in the quarter. I mean, how should we sort of think about repos going forward? You guys have plenty of cash, you lowered your capex. You know, how are you thinking about — on repos as we move forward?
D. Scott Barbour
Yeah, it’s something we’re looking at, John. We continue to look at it. So we’ll look. It’s just something we measure based on our capital needs right now and what we’re investing in there. And as you heard me say, some of those projects are moving out to the right a little bit, so we’ve got a little bit of availability, a little bit more cash. The OBBA bill is going to give us a little bit more cash flow than what we had thought as well coming into this year from the bonus depreciation and the R&D piece of that.
So again, a little bit more cash to deploy than what we thought. So again, I would look to us looking at data here in the next couple of quarters. And again, as we look at that based on our working capital needs, our capital expenditures, our innovation, and other investments that we’re making, it becomes a key part of that disciplined and balanced capital allocation approach that we want to use. So right now, we’re comfortable where we are, but that doesn’t mean that in the next couple of quarters, we take what I’ll put air quotes around excess cash and put that to work. So that’s how I talk to it.
John Lovallo
Makes sense. Thank you.
Operator
Your next question is from Trey Grooms with Stephens.
Ethan
Hey, good morning, everyone. This is Ethan [Phonetic] on for Trey. Thanks for taking the question. I wanted to hone in on allied and Infiltrator, and those two segments seeing stronger growth versus pipe, and how you guys are seeing a nice mix benefit there. So, any sense on how you guys are expecting that sort of relative performance to trend for the year, maybe any margin mix benefits versus what had been baked into guidance? And I think I also heard that there was some geographic mix benefits as well. So any more color on that would be great. Thanks so much.
D. Scott Barbour
So good question, and we will continue to really drive the allied — work on programs to get higher attach rates of pipe and allied products. And what I mean by that, we are working a lot of programs to sell the full package and to increase our penetration of the allied products at a greater rate than we increase our penetration of plastic pipe. That goes on in every geography, some are ahead of others, and those geographies that are a little behind in that, where we’re doing some new things to try to stimulate that.
Infiltrator is infiltrator. It’s new products. It’s the tanks. We continue to invest heavily in that business from a capital and resource perspective and acquisition perspective to drive that at a higher growth rates. So it’s part of our algorithm is to drive allied and infiltrator at higher-growth rates than the basic pipe business.
That said, I think, it’s kind of built into our guidance those relative growth rates. And when we can execute on that, sometimes we get a little bump. I think we probably got some right now. The other thing I would add to that is the really nice program that the Infiltrator team is working on the Orenco acquisition. That mixes them down a bit. They kind of take that personally. So they’re working really — some really good programs, and Orenco team is doing a good job executing those programs as a matter of fact. So that’s another big work item for us as a company is to continue to improve the profitability of that acquisition. And so those are kind of our major levers. I think we’ve built it into our guide mostly, but to the extent we can exceed our expectations around growth, that would help the gross margin mix of the company.
Ethan
Got it. Got it. That’s very helpful. And I appreciate the color there. And quickly shifting to the cost of the price equation. Materials seem to be a bit of a good guy there. Any color that you can give on what’s driving the outperformance there? And — yeah, any more color on that would be helpful. Thank you.
D. Scott Barbour
Yeah. Anytime you talk about price-cost, starting with the price side, obviously, we’ve got a little bit of that headwind we talked about for the pricing that started coming off a little bit in the second quarter of last year, continuing as we move. You obviously got some mix that goes into there that makes it on that side a little bit better than what we had thought.
On the resin side of the house, we have really good visibility of that. We know what’s on the balance sheet. We know it’s going to release over the next couple of months through cost-of-sales and our gross margin. So again, not a lot of surprise there, but again, to your point, a nice tailwind.
Scott Cottrill
It’s execution. So it’s execution. It’s good price-cost management through both pipe and allied products.
D. Scott Barbour
Yeah.
Operator
Your next question is from the line of [Indecipherable] with Loop Capital.
Unidentified Participant
Hi. Thanks. Congrats on the quarter. I wanted to ask just first on the fixed-cost absorption that you had previously called out and saw in the first quarter. Just wanted to be clear on that, that’s fully behind you, and there’s no lingering impact as you move into Q2.
D. Scott Barbour
Yeah. Nothing worth highlighting there. We got most of that behind us, like we talked about.
Unidentified Participant
Okay. And then just wanted to follow up, just in light of the type of backdrop that you’re seeing on the demand side, I think I can predict the answer to this question, but are you seeing any change in the competitive landscape? I know you’re getting a ton of questions. With respect to new capacity that’s come on in certain regions over the last several quarters, any thoughts on the competitive backdrop given demand in your words remains here pretty tepid.
D. Scott Barbour
Yeah. Yeah. Look, I appreciate that you continue to get those questions, and I have nothing new there. I mean, we continue to execute well, and I think there’s a few things to point out here. One is sequentially, our pricing has been very consistent for the last four or five quarters, and we have managed pricing against whatever competitive thing we face, mainly in pipe, and we’ve done that and kept our pricing consistent for a year now, and we continue to grow in residential and non-residential, which are our two biggest segments, and is where people try to come after us.
We continue to work our costs pretty darn well, and the profitability of that type of thing is pretty consistent. We’ve executed a lot of different materials programs — engineering programs. Our logistics and transportation team has done a great job of working on new programs and using our new assets. We’ve completely refreshed our truck and trailer fleet over the last year, year and a half. So we’ve done all these things to kind of manage price, materials, and conversion through the capex. We offset a lot of that underabsorption, and our margins are pretty good. I mean, the resiliency of the margins in the face of that competition, you know, over the last year that you guys have been bringing up, it’s not like we never had competition. We’ve always had some.
I think we’re proving that we have a resilient model. And I don’t believe in a tepid environment of demand like this that radical price actions increased demand. They don’t. I mean, there’s only so many projects that are going to come to the market, and you’ve got to have price discipline around that. So I feel pretty good where we are. And I sometimes feel like I don’t know what more I can do to demonstrate that we know how to manage this environment. But we’ll keep trying — keep working our programs, keep nailing down 30% plus margins, I guess we’ll just keep moving on that path.
I know that was a long answer [Indecipherable] but I felt I wanted to really try to put that to bed for you.
Unidentified Participant
No, I appreciate that. Thanks, and all the best as we move forward.
Operator
Your next question is from the line of David Tarantino with KeyBanc Capital Markets.
David Tarantino
Hey, good morning, guys.
D. Scott Barbour
Good morning.
David Tarantino
Maybe just on infrastructure, it sounds like the sales drop from a function of tough compare. So, maybe could you walk us through the underlying demand trends there and how we should expect this to move forward?
D. Scott Barbour
Yeah. There are some tough comps in infrastructure, really driven by a lot of very nice airport projects that occurred a year ago. We’re pretty strong in that, particularly in the retention detention area. And those — I mean, I don’t like, hey, non-repeat of big projects, but that’s kind of what happens in that segment.
Mike, on the pipe side?
Michael Higgins
Yeah. I think on the pipe side, you know, David, it’s been kind of highly variable, and we’ve talked to you guys previously about this. Scott mentioned it in the prepared comments about how our participation varies by state depending on the strength of kind of our approvals and acceptance. And it’s really a case where we kind of have half the states doing pretty well and then half the states being a bit slow. And I would say as we look forward, you know, kind of project identification is flat, but we’re not seeing as much at the DOT level, but seeing more at the local public infrastructure level, which those projects tend to be a bit smaller than what you see for the DOT.
I think there’s some other things you see out there, too, right? I know everybody talks about, hey, only 50% of the infrastructure bill money has been outlaid, so there’s stuff to come. But when you look at it, I think the contract counts nationwide. By the various people you track, they’re anywhere down from 3% to 11%, but the value of those contracts is up. So kind of what we’re seeing is, hey, it’s costing more to do these projects. So kind of more money, more costs, but less projects out there. But again, it’s a big focus for us. We continue to work kind of our go-to-market strategy, our market-share model against executing there, and we’ll continue to work that.
David Tarantino
Okay, great. And then maybe following up on non-res. Could you just give us a little bit more color on what you’re seeing in terms of the pipeline of projects and orders relative to the tepid environment you guys outlined in the guide, and maybe frame for us how the conversion outgrowth is tracking relative to these trends?
Michael Higgins
Yeah, I would say the — kind of the forward-looking indicators around project identification and quoting, and the other kind of third-party metrics we look at, kind of line up with a tepid environment. We still think even though our share might be more mature in non-residential versus residential or infrastructure, you know, in those key states in the South and the Southeast, where we have lots of opportunity for share gain. We’re seeing strong sales in the quarter, and we would attribute some of that. So a little bit of, hey, those geographies might be a little stronger from an activity standpoint, but also too that we’re taking share. When you look at the states this quarter that were strongest from a volume perspective on non-residential, we like those states that we see, Florida, Texas, Tennessee, California; those are all states that you guys have heard us talk about. They’re kind of in that lower half, the smile, the crescent, whatever you want to call it, and we had good volume growth in the quarter there.
So that shows us that, hey, the markets are like on fire there. They’re might be a little better than the national average, but we’re being successful, you know, taking share like Scott was talking about, the markets are tough. So you’re trying to get more share of wallet, acquire new customers, do more conversion. HP has been strong growth in those states as well. So I think it’s — we kind of attributed to, hey, we need to control, we can control, and that’s the execution of our go-to-market strategy.
Operator
Your next question is from the line of Mike Halloran with Baird.
Mike Halloran
Hey, good morning, everyone. Just a couple of quick guidance questions, just following up on it. First on the revenue side, you had that slide last quarter that pretty aggressively or detailed the revenue outlook from an end-market perspective moving through the year. Curious if that’s changed and if there’s been any moving pieces in the thought process to the tepid market sitting here, and whether you just think normal seasonality is what’s embedded in the guidance for more first quarter is some sort of deterioration. Any context around that would be great.
D. Scott Barbour
No, I think our look to the end-markets mirrors what we went out with guidance-wise, as adjusted for seasonality, as you mentioned, Michael. So no change to our outlook right now to those end-markets, hence why we’re leaving our guidance unchanged.
Mike Halloran
Okay. That’s what I figured. And then similarly on the margin line of things, and if I hear all of the commentary around the puts and takes with margins, there really wasn’t anything unsustainable in the first-quarter margin here, other than possibly mix. And I heard Scott B.’s comments on more concern over what demand looks like back-half of the year. That’s partially why there’s some caution around the margin line. But what I would like to confirm here is a couple of things. One, just that the sequentials, as you’re thinking about the margins, haven’t really changed, or the thought process around it hasn’t really changed. And then secondarily, are there any moving pieces here that we need to think about other than again maybe mix normalizing that would lead to more compression than normal versus that first-quarter number, because essentially, you look at the next three quarters relative to where the first quarter it is, and there is an implication of something a little bit worse than normal. Doesn’t seem that’s what you’re saying. So any context there would be helpful.
D. Scott Barbour
No, that’s exactly what we’re not saying. So again, I think when you look at that kind of how those margins will convey through the year, and especially Q1 to Q2, Q2 usually looks a lot like Q1. Obviously, there’s going to be puts and takes there based on our Q1 performance, but again, it’s one quarter choppy tepid end-markets. So again, we’re comfortable leaving the guidance ranges where they are right now.
Scott Cottrill
Yeah. What I would add is my worry, Mike, is the demand side. And if that demand side is weaker than I anticipate in the plan, is that going to cause me some absorption problems? Again, I got to go work. So — but as far as pricing and materials and our ability to convert and our ability to transport, the mix of Infiltrator and allied versus pipe and all that, I’d say we’re kind of per the norm in terms of these first-half, second-half, and then relative growth rates of the various segments.
Operator
[Technical Issues] Research.
Unidentified Participant
Northcoast Research. Thank you. So yeah, good morning. I had a couple of questions here. Most of mine have been answered, but a couple of big-picture. First of all, I know there’s been some drama in the — among some of the bigger players in distributions and new players coming in. I’m just curious if there’s anything to call out there in terms of any impact on your business from a volume or margin standpoint? Is there inventory building or drawdowns, any discounting, anything with that volatility in the channel that’s — yeah.
D. Scott Barbour
Good question. And drama is a good word, I’d say. And the answer is that we believe that to be largely in the past for relative to us, and there would be nothing from an inventory build or mix, or different behavior that we would call out on that. I mean, we’re always dealing with some level of change and drama relative to distribution and end-markets, and customers. It was a bit heightened there for a while, but I’d say it’s calmed down, Ryan. [Phonetic] And we do, though always look for opportunities to run programs to do stuff, but it’s not affecting our business in any spectacular way.
Unidentified Participant
Got it. Okay. That’s helpful. And then second, just big-picture. If my math is correct, pipe was barely 50% of sales in the quarter, 50.1% is what I got. So kind of heading towards this milestone where pipe actually becomes less than half of the Company, which is pretty amazing when you — we remember the days when it was 90-10 [Phonetic] pipe and allied products. So what’s the long-term vision? Should we expect pipe to just continue to be declining in the mix over two, three, or four years, and at some point, it’s a third or a quarter of the Company? Or do we kind of stabilize, and we should think about that 50-50 kind of being where the Company wants to be longer-term?
D. Scott Barbour
Yeah. So again, another good question. I don’t see it being a quarter or a third of the business for sure. I see it kind of bouncing around this 50-50, and I always kind of come back to our long-term strategy is to grow the Infiltrator business and the allied products business faster than the pipe business, because we believe we are less penetrated and particularly in the allied products, than the pipe. So we therefore have more kind of open space and growth opportunities.
So we will continue to work on that. Whether it goes to 40% at some point, I would see that being the kind of the low watermark of it. But we do think it’s very important for us as a company to grow our higher-margin product lines faster than the Company average to create a positive mix for the Company. So that’s kind of core to my strategy for the Company.
Unidentified Participant
Got it. Okay, very helpful. Best of luck. Thanks for your time.
D. Scott Barbour
Yeah. Thank you.
Operator
At this time, there are no further questions. I will now hand the call back over to our presenters for any closing remarks.
D. Scott Barbour
We appreciate all the questions today and the participation in the call. We feel good about the quarter. We feel good about how we are executing. I’ll just reiterate, we’re worried about demand, and I don’t think it’s things that we might do — that we’re doing I think it’s just the environment that we’re in. But we also know we have the right long-term trends and long-term water positioning for our on-site septic business, our wastewater business, the Infiltrator, our allied products and pipe business through ADS.
So we like the hand we’re dealt. We see good needs from the capex and opportunities of the cash. So we continue to be very focused on that as a management team and our Board. That said, we appreciate it. Thank you. We look forward to the follow-up calls and seeing you all around.
Operator
[Operator Closing Remarks]