Executives at Advanced Drainage Systems, Mohawk Industries and Azek shared expectations for 2025 housing and construction activity during recent investor calls. | Mega Pixel/Shutterstock
Editor’s note: Learn more about durable goods and many other topics at the 2025 Plastics Recycling Conference on March 24-26 in National Harbor, Maryland.
This story has been corrected.
In recent earnings calls, executives at Advanced Drainage Systems, Azek Building Products and Mohawk Industries voiced consistent themes for the construction and housing sector, including uncertainty surrounding federal policy and funding, persistently elevated costs, weather impacts and a shift toward localizing supply chains.
At Advanced Drainage Systems, the largest plastics recycling company in the U.S., CEO Scott Barbour cited federal funding as a tailwind for infrastructure sales heading into 2025 despite uncertainty surrounding recent freezes on funding, including the Biden-era Infrastructure Investment and Jobs Act.
“We benefited from that over the last couple of years as some of those really big projects got going quickly on battery plants and the semiconductor plant in Ohio and things like that,” Barbour said during a Feb. 6 earnings call.
A year ago, around 35 active airport drainage projects were tied to IIJA funding, Barbour said. Confirming funding for those “could be lumpy” with the new administration, but he expected funding for road-related projects to be more consistent.
Flooring manufacturer and RPET processor Mohawk Industries, however, is more exposed to markets affected by potential tariffs, executives said during a Feb. 7 earnings call. CFO James Brunk said Mohawk imports about $300 million in goods from Mexico and exports about $200 million to Canada. CEO Jeff Lorberbaum said tariffs could ultimately boost overall U.S. manufacturing, but “how it balances out is anybody’s guess … since we don’t even know what it is.”
For its assets in Mexico, which include ceramic and vinyl flooring plants, the company is reviewing such options as moving to other Mohawk facilities, outsourcing production or simply raising prices, Brunk said.
Regarding the administration’s plans, however, Brunk quipped: “We have no idea what they’re going to be, how they’re going to be executed and what’s going to happen. Other than that, we have a clear view.”
Azek CFO Ryan Lada said during an earnings call Feb. 4 that the siding and decking company’s exports to China and Mexico are modest, and total international sourcing of materials and products including Canada is around $120 million. CEO Jesse Singh added that Azek has alternative sources for its Canadian-origin materials.
To help further its efforts to drive conversion from wood lumber to composite and to incorporate recycled resin, Azek recently acquired a regional PVC and PE recycling operation in Indiana for $11 million, Singh said.
“This acquisition not only expands our waste material sourcing network but also expands our capabilities to process hard-to-recycle materials through unique recycled segregation and processing technologies,” Singh said. He didn’t provide further details.
Azek is more than halfway to its goal of transitioning from recycled HDPE to LDPE for some of its composite lumber, Singh said, and continues to ramp up the percentage of recycled PVC in its siding and decking products. One challenge has been making the process cost-effective, he added.
Construction and durable goods sectors
At ADS, non-residential business – which comprises about 45% of total sales – rose by 7% in the quarter. Southern and southeast states including Texas, Florida and Georgia continued to lead growth. Accordingly, ADS recently began building a $30 million recycling facility expansion in Georgia to provide resin to its seven plants in the region.
In late January, the company filed a Worker Adjustment and Retraining Notification in Washington state indicating it would shut down its Olympia plant by the end of June and lay off 54 people.
In the residential sector, which comprises 35% of total revenue, ADS sales were up by 9% in the quarter. Executives were bullish on the construction sector, saying home builders continue to acquire and develop land to help reduce the “structural undersupply of homes.”
In the most recent U.S. Census Bureau data, new residential building permits issued were at 1.482 million in December, lower by 3% on the year. Building permits help indicate the health of construction activity in the near future.
Home builders are not optimistic about the market, according to the monthly National Association of Home Builders / Wells Fargo Housing Market index, a survey of builders. A score above 50 indicates net optimism. Key influences on builder confidence include interest rates, employment rates, material costs and inflationary pressures, according to the index.
For January, home builder confidence was at 47, higher by 1 point on the month, according to the index. It fell to 42 in February, with the industry group citing builders’ concerns over tariffs, high mortgage rates and housing costs.
In segments relating to housing and construction, the first three months of the year are typically the lowest in demand, owing to both weather patterns and, for exporters, slowdowns relating to the Lunar New Year.
To end 2024, however, new single-family home sales in December were at 698,000, higher by 7% on the year, and existing home sales rose by 9% to 4.24 million, according to data from the Census and the National Association of Realtors. In comparison, December 2020 existing home sales reached 6.76 million.
In durable goods, a key potential end market for recycled plastics, December orders were down by 4% on the year at $276.1 billion, and new orders for manufactured goods were down by 1% on the year at $578.5 billion.
Editor’s note: Because of an editing error, an earlier version of this story National Association of Home Builders / Wells Fargo Housing Market index misstated the meaning of a 50 score.