Adam Bubis

Adam Bubis asked for a breakdown of the high-level organic growth performance within the Environmental Solutions (ES) business across its different lines, such as landfill, industrial services, and E&P, beyond the impact of the non-recurring emergency response project. He also inquired about the current status of Republic Services' $100 million runway EBITDA target for landfill gas, including the timing of its realization and the current base.

Answer

CFO Brian DelGhiaccio confirmed that all three ES business lines—landfill, industrial services, and E&P—were down year-over-year, with the decline in landfill and E&P volumes having the largest impact on margin performance due to high decremental margins. He noted that the company is well-positioned to capture these units at similar margins when volumes return. Regarding landfill gas, Mr. DelGhiaccio stated that by the end of 2026, the company expects to reach approximately $40 million of the $120 million incremental EBITDA contribution, with the EBITDA exceeding revenue due to equity pickup in joint ventures.

Adam Bubis asked for a breakdown of the high-level organic growth performance in Environmental Solutions across different business lines, such as landfill, industrial services, and E&P, to understand the moving pieces beyond the $50 million emergency response impact. He also inquired about the realization of the $100 million runway EBITDA for landfill gas, asking for a mark-to-market update, timing, and the current base.

Answer

CEO Jon Vander Ark confirmed that landfill, industrial services, and E&P volumes were all down year-over-year in the Environmental Solutions business, with landfill and E&P volumes having the largest impact on margin due to high decremental margins. He expects to capture these units at similar margins when they return. Regarding landfill gas, Mr. Vander Ark stated that by the end of 2026, approximately $40 million of the expected $120 million incremental EBITDA contribution would be realized, noting that EBITDA exceeds revenue due to equity pickup in joint ventures.

Adam Bubis asked for a breakdown of the 2026 versus 2025 margin outlook, specifically the drivers of expansion (price, execution, M&A rollover) and any offsets like favorable claims or equipment sales. He also inquired about the range of M&A outcomes for 2026 and how M&A is viewed in the context of the company's leverage target.

Answer

Kyle Larkin, President and CEO, detailed the margin expansion drivers: approximately 50 basis points from construction, 20 basis points from materials, and 50 basis points from SG&A efficiency. These gains are partially offset by non-recurring items like claim recoveries and larger gains on equipment sales from the previous year, resulting in a net 50 basis point improvement. Regarding M&A, Mr. Larkin expects several strategic acquisitions in 2026, maintaining a target of 2.5 times net debt, but indicated flexibility to temporarily exceed this for larger, compelling opportunities with a plan to deleverage.