ADS trims its sales outlook as housing slows, but data centers and pricing hold the line

Advanced Drainage Systems cut its full-year sales range and kept its profit range almost intact. That tells you most of what you need to know about the US plastic drainage pipe market right now: volume is harder to find, and pricing is doing the heavy lifting. The maker of stormwater and onsite wastewater products reported its fiscal 2027 second-quarter results on November 5, for the quarter ended September 30.

The numbers

Net sales rose 4.6% to $889.4 million, from $850.4 million a year earlier. Stormwater sales were $712.1 million, up 6.2%, but $77.3 million of that came from NDS, which ADS bought earlier. Strip that out and stormwater was down 5.3% organically. Wastewater sales slipped 1.3% to $177.3 million.

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Adjusted EBITDA was flat at $286.8 million, and the margin eased to 32.2% from 33.8%. Net income from continuing operations fell 14.6% to $133.6 million. Over the first half, though, the adjusted EBITDA margin was 34.1%.

The new fiscal 2027 outlook is net sales of $3.300 billion to $3.400 billion and adjusted EBITDA of $1.000 billion to $1.030 billion, with capital spending of about $200 million.

"The demand environment is softer today than when we initially issued guidance in May." Scott Barbour, President and CEO, ADS

Where the demand is

According to a summary of the earnings call, non-residential sales are up 10% so far this year, helped by big capital projects such as data centers and warehouses. Residential is the weak spot: organic sales there fell 4%, and management expects the market to stay tough for the rest of the year as higher interest rates stall residential land development. Management also pointed to its HP polypropylene pipe winning share from concrete in infrastructure and commercial work.

The sales cut is mostly about resin. Barbour said ADS is seeing lower inflation on materials than it first expected, and the call summary says that means fewer of the planned price increases are needed. Management also said it has no plans to give back the pricing it has already put through.

Still buying

ADS isn't pulling back on deals. In October it agreed to buy StormTrap, a maker of engineered stormwater systems for large, space-constrained sites, for about $530 million, according to an 8-K filing. StormTrap brought in about $165 million of revenue in the twelve months to July 2026. ADS expects the deal to close in the fourth quarter of calendar 2026.

That fits the plan ADS laid out at its June investor day: more than $4 billion of revenue and more than $1.2 billion of adjusted EBITDA by fiscal 2030.

Our read

This is a business choosing to keep investing through a soft patch. Housing-led volume is down, but non-residential work is growing and ADS is still doing deals. For pipe makers that also sell into data center and commercial sites, ADS's mix shift is a useful early signal.

What it means for hiring

When residential volume softens and non-residential grows, sales teams shift with it. We expect demand for regional sales managers and engineers with relationships among site developers, civil engineers and contractors on large commercial and data center jobs.
Holding price while resin eases takes disciplined commercial leaders. Pricing managers and sales leaders who can defend margin with distributors are worth more in this market.
Two acquisitions in a year (NDS and, pending close, StormTrap) mean integration work. In our view, leaders who have merged product lines, plants and sales teams after a deal will be in demand across the drainage and pipe sector.

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