Seth Weber

Seth Weber asked for an update on the integration of Shamrock within the Environmental Solutions (ES) business, inquiring if an industrial activity pickup is necessary for its growth and the early progress of the integration. He also asked if the first-quarter volume outlook for 2026 accounts for recent severe weather impacts, particularly on the East Coast.

Answer

CEO Jon Vander Ark reported that the Shamrock integration is progressing well, expressing satisfaction with the business. He explained that Republic Services acquired Shamrock due to prior engagement as a customer for industrial water and liquids, and sees future growth opportunities in that space, potentially expanding beyond Shamrock's predominantly Southeast base. Regarding the Q1 2026 volume outlook, Mr. Vander Ark confirmed that the guidance fully incorporates the significant impact of recent winter storms, estimating a $25 million impact in January alone, potentially reaching $30-$35 million for the first quarter, which will affect Q1 volume performance.

Seth Weber asked about the integration progress of the Shamrock acquisition and whether increased industrial activity is needed to drive its performance. He also inquired if the first quarter volume outlook was haircut for weather, specifically the impact of recent winter storms on the East Coast, and if this was baked into the guidance.

Answer

CEO Jon Vander Ark reported that the Shamrock integration is progressing well, expressing satisfaction with the business. He noted that Republic Services acquired Shamrock due to prior supplier relationship and vertical integration benefits, and sees future growth opportunities, potentially in other regions. Regarding Q1 volume, Mr. Vander Ark confirmed that the guidance includes the impact of weather, estimating a $25 million impact in January and potentially $30-$35 million for the first quarter, which will make Q1 volume appear lower.

Seth Weber with BNP Paribas asked if $100 million EBITDA is still the right way to think about RNG contribution for the 2027 run rate when fully operational. Seth also inquired whether Florida and Texas are still weak or softer end markets, and if there was any weather impact in Q4 or Q1.

Answer

Mary Anne Whitney (CFO) confirmed $100-$120 million EBITDA is a fair way to think about the aggregate return on the overall RNG investment, but noted that almost half of the projects are already online, so the year-over-year incremental contribution for 2027 won't be the full amount. Ron Mittelstaedt (President and CEO) stated no notable weather impact in Q4, but a significant cold snap in January affected business in up to 30 states, though not materially. Mary Anne Whitney (CFO) added that construction-driven activity in Florida and Texas remained about the same, with minor incremental weakness in the Northeast due to weather in Q4.

Seth Weber asked for clarification on the RNG business, specifically if $100 million EBITDA contribution is still the right run rate for 2027, and the implications of half the projects being online. Seth Weber also inquired about prior calls mentioning Florida and Texas as weak/softer end markets, their current status, and any weather impact in Q4 or Q1.

Answer

Mary Anne Whitney (CFO) confirmed that $100-$120 million is a fair way to think about the aggregate EBITDA contribution when fully operational. She clarified that almost half of the projects are online today, so the year-over-year contribution from 2026 to 2027 won't be the full $100 million. Ron Mittelstaedt (President and CEO) stated no significant weather impact in Q4 but noted a 'fairly significant cold snap' in January (Q1) affecting up to 30 states, though nothing material. Mary Anne Whitney (CFO) added that construction-driven activity in Florida and Texas remained about the same, with minor incremental weakness in the Northeast due to weather in Q4.

Seth Weber inquired about Ecolab's new business wins, seeking clarification on whether these represent conquests from competitors, new companies entering the market, or existing customers adding more suppliers.

Answer

Chairman and CEO Christophe Beck stated that the primary focus is on current and largest customers, particularly the top 35, which represent a $3.5 billion growth opportunity. He noted that sales growth with this group outpaced the total company by approximately 2 percentage points. Beck also mentioned expanding this model to regional customers and individual customers, and highlighted a recent global blitz that increased new business by over 30% in one week.

Seth Weber asked for more color on Ecolab's new business wins, specifically whether they represent conquests from competitors, new companies adding suppliers, or other types of growth.

Answer

Christophe Beck, Ecolab's Chairman and CEO, emphasized that new business is the company's top focus, with a mantra of 'we're all in sales.' He explained that the primary focus is on expanding share of wallet with existing and largest customers (top 35 have $3.5 billion potential), which is the most cost-effective growth. Beck also mentioned expanding to local large customers and individual customers, noting that a recent global blitz resulted in over 30% new business growth compared to the prior year, driven by Ecolab's strong value proposition and stable retention.

Seth Weber inquired about the Healthcare cross-selling opportunity, specifically if it's still focused on small and medium-sized customers or gaining traction with large hospital networks. He also asked for an update on the national accounts business, and if its low double-digit CAGR was maintained or improved in 2025.

Answer

CEO Jim Fish believes Healthcare cross-selling will ultimately be more of a large customer opportunity (A, B, C segments) as decision-makers for solid waste and healthcare waste are often the same, offering a strong value proposition. He also stated that national accounts have been a success story, performing well on both volume and price due to differentiated service, data, and analytics.

Seth Weber, Equity Research Analyst at BNP Paribas, inquired about the Healthcare cross-selling opportunity, asking if the focus remains on small and medium-sized customers or if WM is gaining better traction with large hospital networks. He also requested an update on the national accounts business across the entire company, specifically if its low double-digit CAGR is continuing or improving in 2025.

Answer

CEO Jim Fish stated that the Healthcare cross-selling opportunity is ultimately expected to be more significant with large hospital networks, as decision-makers for solid waste and healthcare waste are often the same, and WM's combined service offerings resonate strongly. Jim Fish also highlighted that the national accounts business has been a "real success story" for WM, demonstrating strong performance in both volume and price through differentiated service and data analytics, improving significantly over the past decade.

Asked about the 2024 CapEx guidance, whether it reflected a pull-forward of spending, and its ability to support utilization levels. Also inquired about the rental rate outlook for 2024, free cash flow expectations, and guidance for used equipment sales margins.

Answer

The company confirmed some CapEx was pulled forward into Q4 2023. They anticipate utilization being pressured in H1 but showing positive year-over-year improvement in H2. Rental rates are expected to be positive but moderate from recent years. Free cash flow is expected to be positive for 2024. Used equipment sales margins are guided to be 50%+, with Q1 potentially closer to 60%.