Tyler Brown

Tyler Brown asked about Casella's five-year vision, including M&A strategy (speed, deal size), focus on self-help, and overall message to shareholders and employees. He also inquired about the $5 million synergy baked into the Mid-Atlantic guide and the quantum of G&A leverage expected from 2027 onwards.

Answer

President and CEO Ned Coletta outlined a vision of continuity, focusing on safety, employee engagement, internal communications, and strategic plans. He emphasized driving value through landfills, collection (pricing, automation), resource solutions, and growth initiatives. EVP and CFO Brad Helgeson clarified that the $5 million synergy is conservative, with more opportunities post-system integration for surgical pricing and route optimization. Brad Helgeson also stated the long-term G&A goal is to reach 10% from the current 12%, with initial benefits expected in 2027 from improved back-office processes and technology utilization, noting doubled-up costs in 2025-2026 during the transition.

Tyler Brown asked about Casella's vision for the next five years, including M&A strategy (speed, deal size), focus on self-help, and overall message to shareholders and employees. He also inquired about the Mid-Atlantic integration, specifically the $5 million synergy from new automated trucks and the system rollout by Q2, and the potential for G&A leverage starting in 2027.

Answer

Ned Coletta, President and CEO, emphasized continuity of strategy, focusing on safety, employee engagement, internal communications, and strategic plans. He highlighted driving value through landfills, collection, resource solutions, and a robust acquisition pipeline. Regarding the Mid-Atlantic, Ned Coletta confirmed a conservative estimate for synergies, with system integration nearing completion to enable route collapse and back-office efficiencies. Brad Helgeson, EVP and CFO, added that full system integration would allow for better assessment of customer and route profitability for surgical pricing, with long-term opportunities beyond 2026. For G&A, Brad Helgeson stated the long-term goal is to reach the industry benchmark of ~10% from the current ~12%, with 2026 being pivotal for laying groundwork with better systems and processes, while Ned Coletta noted doubled-up costs in 2025/2026 during the technology transformation.

Tyler Brown inquired about the operational lags in the Mid-Atlantic region, the potential for future pricing opportunities and synergy benefits, the market dynamics of the Mountain State Waste acquisition, and the reason for a decrease in interest expense guidance.

Answer

President Edmond Coletta explained that a legacy GFL billing system and truck delivery delays have slowed synergy realization in the Mid-Atlantic, but confirmed a significant pricing opportunity exists once their own system is implemented. He estimated a $5-10 million synergy benefit over a couple of years. CEO John Casella described the Mountain State Waste deal as a strategic platform expansion into West Virginia's growing markets. CFO Bradford Helgeson attributed the lower interest expense guidance to refining forecasts and reducing conservatism.

Tyler Brown from Raymond James Financial inquired about the performance lag in the Mid-Atlantic region, the potential for future pricing opportunities and synergy benefits, the market dynamics of the Mountain State Waste acquisition, and the reason for a decrease in interest expense guidance.

Answer

President Edmond Coletta explained that integration in the Mid-Atlantic was slowed by a legacy GFL billing system and delays in new truck deliveries, but confirmed a significant pricing and synergy opportunity of $5-10 million over a few years exists once their systems are implemented. Chairman & CEO John Casella added that the Mountain State Waste deal provides a strong platform for growth in Pennsylvania and West Virginia. EVP & CFO Bradford Helgeson noted the interest expense guidance was lowered due to refined forecasting and reduced conservatism.

Tyler Brown sought clarification on the 2024 guidance, the financial impact of C&D landfill volume weakness, the key drivers for the 2025 outlook, and details on the company's waste internalization strategy, including the use of long-haul trucks versus rail transport.

Answer

CFO Bradford Helgeson confirmed that unexpected Q3 insurance costs largely offset the contribution from the Royal acquisition, keeping 2024 guidance stable. President Ned Coletta detailed that the C&D volume drag, caused by a competitor's impending landfill closure, has been significant but is expected to resolve in 2025. He also explained that new long-haul truck lanes are being established to increase internalization, while the McKean rail site is being reserved for higher-value MSW and special waste streams.

Tyler Brown asked about the progress of discussions regarding captive incinerator closures, potential developments in 2026-2027, and broad incineration pricing trends for 2026. He also inquired about the confidence in industrial services improvement, whether it's based on planned turnaround work, and the expectations for 2026. Finally, he asked if the vac truck and field investments indicate that building assets now offers better economics than M&A due to high acquisition costs.

Answer

Co-CEO Eric Gerstenberg noted active pursuit of captive closure opportunities with key customers, anticipating some sites to come offline in the future, and expected mid-to-upper single-digit price improvement for incineration. EVP and CFO Eric Dugas stated modest expectations for industrial services in the 2026 guide, despite positive leading economic indicators. Co-CEO Mike Battles added that the industrial complex might have turned a corner. Eric Gerstenberg explained that vac services growth (8-14%) necessitates more internal trucks to eliminate subcontracting and fuel waste into their network. Mike Battles clarified that the company's balance sheet allows for both M&A and capital additions, with decisions based on ROI.

Tyler Brown inquired about the progress and potential closure developments in the captive incinerator market for 2026-2027, alongside expected incineration pricing trends. He also asked about the confidence in industrial services improvement for 2026, specifically regarding planned turnaround work, and the strategic rationale behind internal growth investments like the vacuum truck fleet expansion versus M&A.

Answer

Co-CEO Eric Gerstenberg noted active discussions with key customers in the captive market, anticipating future closures, and projected mid-to-upper single-digit incineration pricing improvements. Co-CEO Mike Battles and CFO Eric Dugas indicated modest, conservative expectations for industrial services in 2026, despite some positive leading indicators. Gerstenberg and Battles explained the vacuum truck fleet expansion is driven by strong organic growth in vac services (8-14%) across business units, fueling the facility network, and is not a pivot from M&A but rather a complementary strategy enabled by strong cash flow.

Tyler Brown inquired about the primary drivers behind the $15 million reduction in the company's EBITDA guidance, specifically asking about the impact of shortfalls in field and industrial services, the magnitude and nature (one-time vs. ongoing) of elevated healthcare costs, and the conceptual outlook for consolidated EBITDA growth into early 2026 given the industrial market conditions. He also pressed for details on the M&A pipeline, including deal size and timing, in light of recent organic growth projects and share repurchases.

Answer

Eric Dugas (EVP and CFO) attributed the guidance adjustment primarily to industrial services ($7 million) and field services ($4 million) shortfalls, with healthcare costs contributing about $4 million to the ES segment and $6 million overall, noting it's a trend many companies face but with mitigation efforts planned for 2026. Mike Battles (Co-CEO) added that high-cost claims were unusually high. Eric Gerstenberg (Co-CEO) stated that a significant industrial turnaround rebound isn't expected until spring 2026 but reiterated a preliminary target of 5% EBITDA growth for next year, driven by waste collection, service businesses, cost-cutting, and volume/pricing growth. Mike Battles (Co-CEO) confirmed active pursuit of both large and small M&A deals, emphasizing prudence and discipline, while also highlighting recent share repurchases as opportunistic.

Tyler Brown inquired about the factors contributing to the adjusted EBITDA guidance reduction, specifically the impact of industrial and field services shortfalls, and the nature of the elevated healthcare costs. He also sought clarity on the conceptual 2026 EBITDA outlook, the timing of an industrial sector pickup, and the company's capital allocation strategy, including M&A pipeline and share repurchases.

Answer

EVP and CFO Eric Dugas attributed the $15 million EBITDA reduction primarily to industrial services ($7M), field services ($4M), and healthcare costs ($4M in ES, $6M overall). He noted healthcare is a trend many companies face, with Q4 guidance reflecting increases, and efforts underway to offset 2026 costs. Co-CEO Mike Battles added that Q3 saw unusually high-cost claims. Eric Dugas indicated a preliminary target of 5% EBITDA growth for 2026, driven by cost-cutting, volume, and pricing in waste businesses. Mike Battles confirmed the company is actively evaluating both large and small M&A deals, emphasizing prudence and discipline, and views recent share repurchases as opportunistic rather than a strategy shift.

Asked about the company's optimistic macro outlook compared to competitors, the dependency of guidance on refinery turnarounds, and the financial impact of bonus depreciation.

Answer

The company is optimistic due to strong volumes, a robust sales pipeline, and a diverse portfolio. Back-half guidance is not dependent on a major ramp in turnarounds. Bonus depreciation will provide a $10-15M cash tax saving in 2025 and is seen as a positive tailwind for US manufacturing, but doesn't change their capital allocation strategy.

Tyler Brown of Raymond James inquired about potential incremental opportunities from California wildfires, the company's involvement in bird flu cleanup efforts, inbounds from captive incinerator operators following the Kimball facility launch, and the current M&A environment for specialty waste assets.

Answer

Co-CEO Eric Gerstenberg confirmed active participation in the California wildfire cleanup, noting it was a net neutral event for Q1 guidance due to initial business disruption. He stated that while the company could assist with bird flu, there were no material opportunities at present. Regarding captive incinerators, Gerstenberg highlighted ongoing discussions with several operators about their strategic options now that Kimball provides additional capacity. Co-CEO Mike Battles added that the M&A pipeline is very active, and despite higher multiples, the company sees value and will be an active participant in 2025.

Tyler Brown asked for clarification on the Q3 performance and Q4 guidance, questioning if the weakness was primarily isolated to the Safety-Kleen Sustainable Solutions (SKSS) segment. He also inquired about the long-term strategy for SKSS, the outlook for 2025, and the potential for strong cash flow generation next year.

Answer

Co-CEOs Eric Gerstenberg and Michael Battles confirmed that the guidance revision was almost entirely due to market challenges in the SKSS segment, while the core Environmental Services (ES) business remains strong. They acknowledged the need for aggressive action to stabilize SKSS profitability. For 2025, Battles projected mid-single-digit organic revenue growth and mid-to-high single-digit EBITDA growth, driven by the ES segment. He also affirmed that 2025 cash flow should be a 'really good story' due to lower CapEx and working capital improvements.

Tyler Brown asked about the specifics of Republic Services' M&A pipeline, including the $400 million in year-to-date acquisitions, the types of assets targeted for the remaining $600 million, and how these acquisitions are factored into the 2026 financial guidance. He also inquired about the components of the 2026 margin guide, particularly the underlying business expansion, and the expected quarterly margin trajectory given prior-year landfill volume comparisons.

Answer

CEO Jon Vander Ark confirmed the Hamm acquisition in Kansas City as a key part of the $400 million, noting the pipeline is predominantly recycling and waste with some Environmental Solutions opportunities. CFO Brian DelGhiaccio clarified that the $400 million in closed acquisitions is included in the guide, contributing 70 basis points to 2026 growth, while the remaining $600 million is not yet factored in. For margins, Mr. DelGhiaccio detailed a 60-70 basis point underlying expansion, offset by drags from commodities (10 bps), acquisitions (10 bps), and higher-margin landfill volumes (30 bps). He projected Q1 2026 margins to be slightly positive, Q2 and Q3 flat to slightly negative due to landfill volume comps, with most margin expansion occurring in Q4.

Tyler Brown of Raymond James Financial inquired about the breakdown of the ~$200 million revenue guidance reduction between the Environmental Solutions (ES) segment and other factors. He also sought more detail on the underlying causes of the slowdown in the ES business, including its E&P exposure.

Answer

CFO Brian Delghiaccio explained that approximately 65% of the revenue reduction is from lower volume expectations in the core recycling and waste business, with the rest from Environmental Solutions. CEO Jon Vander Ark attributed the ES slowdown to macro factors like sluggish manufacturing and trade policy uncertainty, which has delayed customer decisions. He also noted some instances of being priced out of opportunities. Delghiaccio added that the E&P business is a mid-single-digit percentage of the total ES portfolio.

Tyler Brown asked about the key performance indicators for the US Ecology business, the details of the Shamrock Environmental acquisition, and sought confirmation that the Q1 M&A spend was already included in the 2025 guidance.

Answer

CEO Jon Vander Ark confirmed a 75% recurring and 25% project revenue mix for the Environmental Solutions business is a fair estimate and that they track metrics like PMI. He described Shamrock as a strategic acquisition in commercial water treatment that also brings PFAS technology. CFO Brian DelGhiaccio affirmed that the revenue from Q1's acquisitions was already contemplated in the full-year guidance, contributing about one percentage point.

Tyler Brown inquired about the 3-point difference between reported and mix-adjusted pricing in Q4 2025, asking for a breakdown of geographic mix, product mix, and M&A impacts, and the expected shaping of 2026 pricing.

Answer

Mary Andrews Carlisle, Senior VP and CFO, confirmed the 'triple whammy' of mix impacts, stating that two-thirds of the 300 basis point difference was due to geographic mix from prior year hurricane relief, with the remaining third split between acquisition impacts and product mix from base and fill projects. She anticipated 2026 pricing to be lower in the first half and higher in the second half. Ronnie Pruitt, SVP and COO, elaborated that the current mix of large projects, heavily weighted towards base and fill for data centers, would evolve to include more clean stone as projects mature, supporting stronger pricing later in the year.

Tyler Brown inquired about bridging the 3-point difference between reported and mix-adjusted pricing in Q4 2025, specifically the impact of geographic mix, product mix (base/fill), and M&A. He also asked about the expected shaping of 2026 pricing (lower early, higher later).

Answer

Mary Andrews Carlisle, Senior Vice President and Chief Financial Officer, confirmed the 'triple whammy' of mix impacts, attributing two-thirds of the 300 basis points to geographic mix and the remaining third split between M&A and product mix. She agreed that 2026 pricing would likely be lower in the first half and higher later. Ronnie Pruitt, Chief Executive Officer, added that the backlog is strong, with large projects (data centers) initially requiring more base and fill, which impacts early pricing, but will shift to clean stone as projects mature.

Tyler Brown inquired about Q4 2025 volume trends driving the full-year guidance to the low end, and requested more detail on the 'modest improvement' outlook for 2026 volumes across key end markets.

Answer

Tom Hill, Chairman and CEO, noted Q3 volumes benefited from calm weather, pent-up demand, and strong public/improving non-residential demand, but Q4 faces tough comps. Ronnie Pruitt, COO, added that single-family will remain challenging, while public funding and non-residential starts/backlog support demand growth into 2026.

Tyler Brown requested an update on the company's plant technology initiative, asking about its implementation progress and its potential impact on unit cost efficiencies.

Answer

Chairman and CEO James Hill reported they are in the 'early stages,' with the technology fully deployed at 25-30% of the 110-120 targeted plants. He noted they are seeing double-digit throughput improvements at these sites. The full rollout is expected to be completed by early 2026 and will have a positive impact on costs, though the current focus is on measuring throughput gains.

Tyler Brown asked for Martin Marietta's perspective on the current state of pricing, any geographical dispersion, and broader thoughts on achieving the 5.5% average selling price (ASP) growth target through 2030, as outlined at the analyst day.

Answer

Chair, President and CEO Ward Nye confirmed that pricing is consistent with Capital Markets Day expectations, with all divisions posting mid-single-digit price increases in Q4 2025. He noted some Q4 project delays in the East created an optical headwind. He expects pricing to remain steady at around 5% for 2026, with potential for further improvement as private construction, particularly housing, recovers in Martin Marietta's key markets.

Tyler Brown asked for insights into the current state of pricing, any geographical dispersion observed, and the company's broader strategy for achieving 5.5% average selling price (ASP) growth through 2030.

Answer

Chair, President and CEO Ward Nye confirmed no surprises in pricing, with all divisions posting mid-single-digit price increases in Q4. He noted that the 2026 guide of approximately 5% price and 2% volume is consistent with Q4 performance. Ward Nye expressed confidence that a housing recovery, particularly in Martin Marietta's key markets, would further support pricing, aligning with the company's long-term ASP growth targets.

Tyler Brown of Raymond James & Associates, Inc. commented on the solid cost performance in aggregates and asked if, like a peer, Martin Marietta had pushed out any maintenance or stripping costs due to weather. He also requested guidance on the cost inflation outlook for the remainder of the year.

Answer

SVP and Interim CFO Bob Cardin credited the 'excellent cost management' by operations teams. He noted that on a per-unit basis, energy and contract services costs were down low-double digits, while supplies and repairs were down mid-single digits, aided by a diesel fuel tailwind. Cardin specified that excluding the $0.72 per ton impact from the inventory drawdown, unit costs were actually down 2.3%. He expects continued healthy gross margin expansion in future quarters.

Tyler Brown inquired about the breakdown of Saia's $2 billion investment, the maintenance CapEx for the current year, and the company's strategy for shareholder returns (e.g., buybacks, dividends) versus retaining capital for future CapEx cycles.

Answer

Matt Batteh, EVP and CFO, clarified that the $2 billion investment included significant equipment investment alongside real estate, and this year's CapEx is largely maintenance-related for the fleet. Fritz Holzgrefe, President and CEO, stated that Saia expects to be free cash flow generative and, as stewards of shareholder capital, will consider buybacks, dividends, and future accretive investment opportunities (e.g., new terminals) to balance shareholder returns with long-term growth potential.

Tyler Brown inquired about Saia's maintenance CapEx level for 2026 and whether this year's CapEx is primarily for fleet and fleet catch-up. He also asked if Saia would contemplate additional shareholder returns, such as buybacks, or hold capital for future CapEx cycles, given its free cash flow generation and manageable leverage.

Answer

EVP and CFO Matt Batteh confirmed that 2026 CapEx is largely maintenance for equipment, following significant prior investments in fleet. President and CEO Fritz Holzgrefe stated that all shareholder return options (buybacks, dividends) are in consideration, balanced with future accretive investment opportunities, such as expanding the terminal network to potentially 230 facilities. He emphasized stewardship of shareholder capital and the business's growth potential. Matt Batteh highlighted that Saia expects to be free cash flow generative in 2026.

Tyler Brown of Raymond James asked about network balance, specifically if the inbound-outbound ratio in newer terminals has improved and contributed to their mid-90s OR. He also asked if metrics like 'breaks per bill' suggest the company has passed 'peak pain' from its greenfield expansion.

Answer

President & CEO Frederick Holzgrefe confirmed that network balance is improving but still has significant runway. EVP & CFO Matthew Batteh added that productivity metrics like freight touches improved sequentially from Q1 to Q2, demonstrating better efficiency. He noted that eliminating a handle by routing freight direct is a big deal for both service and cost, and they saw that improvement materialize in the quarter.

Tyler Brown of Raymond James asked about frontline employee productivity, given the large number of recent hires, and its potential as a positive factor in 2025-2026. He also inquired about how Saia maintains its culture amidst rapid growth and the results of internal employee surveys.

Answer

CEO Fritz Holzgrefe agreed that there is a significant opportunity to improve productivity as new employees mature and density builds in new markets. On culture, he reported that employee engagement scores have remained high despite the growth. He emphasized that management at all levels is focused on engagement, which is crucial for maintaining their 'Customer First' culture and long-term success.

Tyler Brown inquired about Proficient Auto Logistics' Q1 2026 revenue and operating ratio expectations, the impact of tightening capacity and non-domiciled CDLs on the auto hauling market, the stability of revenue per unit, and the company's capital allocation priorities for M&A, debt paydown, and share repurchases.

Answer

Brad Wright, Chief Financial Officer, clarified expectations for Q1 2026 revenue to be down sequentially but with modest sequential operating ratio improvement. Amy Rice, President and Chief Operating Officer, addressed the non-domiciled CDL issue, noting its impact on recruiting but limited current effect on pricing due to low volumes. She also stated that revenue per unit is expected to be largely stable. Brad Wright outlined capital allocation priorities, emphasizing continued debt paydown, M&A flexibility, and share repurchases as a lower priority.

Tyler Brown inquired about Proficient Auto Logistics' Q1 2026 revenue and operating ratio expectations, the impact of tightening capacity and non-domiciled CDLs on the auto hauling market, the stability of 2026 revenue per unit, and the company's capital allocation priorities.

Answer

CFO Bradley Wright clarified Q1 2026 operating ratio expectations for modest sequential improvement. President and COO Amy Rice and CEO Richard O'Dell discussed the impact of non-domiciled CDLs on capacity, noting insulation for Proficient due to experience requirements but acknowledging broader market capacity exits. Amy Rice also stated expectations for largely stable revenue per unit in 2026. Bradley Wright outlined capital allocation priorities, emphasizing continued debt paydown, M&A flexibility, and share repurchases as a lower priority.

Tyler Brown of Raymond James inquired about the drivers behind the sequential decline in revenue per unit (RPU), the dynamics of the current OEM bid market, and sought clarification on the company's free cash flow generation potential.

Answer

President & COO Amy Rice attributed the RPU decline to a customer mix shift with varying lengths of haul, not core rate weakness. She also described the bid market as active, with OEMs open to share shifts, creating significant growth opportunities. CFO Brad Wight confirmed the annualized free cash flow run rate from operations is expected to be between $30 million and $35 million after accounting for $10 million in CapEx.

Tyler Brown from Raymond James asked for several clarifications, including the company's domestic vs. import vehicle mix, the revenue contribution from the Brothers acquisition, the ramp-up of a $60 million market share gain, and the expected Q2 EBITDA performance.

Answer

President and COO Amy Rice estimated a 60% domestic to 40% import mix. CFO Bradley Wright noted Brothers' revenue is slightly less than $30 million and confirmed the $60 million gain is an annualized figure that began ramping in Q1. Wright also projected improved profitability in Q2, with targeted incremental margins of 20-25%.

Tyler Brown of Raymond James asked about real-time trends in the spot market, the revenue floor for the dedicated Pro Fleet service, and what a 'normal' spot premium over contract pricing would be. He also inquired about the amount of slack capacity in both the company-owned and subcontractor fleets and the CapEx outlook for 2025.

Answer

President and COO Amy Rice described current spot opportunities as 'episodic' and confirmed the dedicated fleet service is at a minimum run-rate of about $4-5 million per quarter. She estimated a more typical spot premium could be in the 25% to 40% range. Rice also noted Proficient has available assets in its company fleet and significant capacity among its 2,500+ subhaul carriers. Chairman and CEO Richard O'Dell projected 2025 CapEx to be in the $25 million to $35 million range.

Tyler Brown of Raymond James inquired about the profitability of the core business, excluding the volatile spot and Pro Fleet segments, and sought clarification on Q4 guidance for revenue and operating ratio (OR). He also asked about potential capacity leaving the market and what additional cost-saving measures Proficient could implement to stabilize margins in a prolonged weak environment.

Answer

CFO Bradley Wright confirmed the core business is profitable but impacted by lower volumes reducing operating leverage. He guided for a 2-5% sequential revenue increase in Q4 with a 100-200 bps OR improvement. Regarding cost controls, Wright stated they are exploring all options, including personnel efficiencies, without harming operations. President & COO Amy Rice added that integration efforts will create soft cost savings, while CEO Richard O'Dell highlighted improving backhauls and mix management through data analytics as key levers for efficiency.

Tyler Brown sought to unpack the comments about approaching $1 billion in sustainability EBITDA by 2027, specifically the delta from the Analyst Day target and its drivers. He also questioned if the normal course CapEx running at less than 9.5% of sales was a good forward capital plan or if 2026 was unique.

Answer

Chief Sustainability Officer Tara Hemmer confirmed the delta in sustainability EBITDA is primarily due to lower recycled commodity prices ($125/ton to $70/ton) and higher electricity costs. CEO Jim Fish clarified that normal course CapEx is expected to be around 10% long-term, with President and COO John Morris adding that 2026 includes catching up on truck investments and unwinding healthcare fleet leases, while sustainability investments are decreasing.

Tyler Brown, Associate VP at Raymond James, sought clarification on WM's sustainability EBITDA target of $1 billion by 2027, comparing the incremental $700 million to the Analyst Day projection of $760-$800 million and asking about the drivers of this delta. He also inquired about the 2026 normal course CapEx, which appears to be less than 9.5% of sales, questioning if this is a forward capital plan or if 2026 is unique, and what the longer-term CapEx run rate might be.

Answer

Chief Sustainability Officer Tara Hemmer and CEO Jim Fish attributed the delta in sustainability EBITDA projections primarily to lower recycled commodity prices ($70/ton versus $125/ton previously) and increased electricity operating costs, while still affirming the strong investment value and 3-4 year paybacks. President John Morris indicated that the longer-term normal course CapEx run rate is likely around 10% of sales, noting that 2026 includes ongoing fleet investments, work on the Healthcare fleet, and a reduction in sustainability investments.

Tyler Brown inquired about the financial impact of wildfire cleanup work, details on various charges this quarter including the plastics film plant and landfill impairment, and sought an early breakdown of the $3.8 billion free cash flow projection for 2026, specifically regarding sustainability investments and fleet capital expenditure. He also asked for an update on the 2025 sustainability EBITDA target and confidence in the $800 million incremental target by 2027 given current commodity prices.

Answer

EVP and CFO Devina Rankin clarified that wildfire cleanup had minimal Q3 impact, with most revenue in Q1/Q2 totaling $115 million, and Q3 solid waste EBITDA growth was largely independent. She explained the landfill impairment related to a long-term expansion pursuit, not an operational site. Chief Sustainability Officer Tara Hemmer stated the Natura plastics film plant was temporarily closed due to market conditions, not technology. CEO Jim Fish detailed 2026 free cash flow drivers including reduced sustainability investments, strong legacy business performance, lower fleet capital expenditure, and contributions from WM Healthcare Solutions. Tara Hemmer confirmed renewable energy is on track for 2025, with recycling lagging due to commodity prices, but automation benefits are significant, and confidence remains high for the 2027 sustainability target.

Tyler Brown asked about the financial impact of one-time cleanup work, specific charges related to a plastics film plant and a landfill impairment, and sought an early breakdown of the 2026 free cash flow projection, including sustainability investments and fleet capital expenditures. He also inquired about the 2025 sustainability EBITDA target and confidence in the $800 million incremental target by 2027 given current commodity prices.

Answer

Devina Rankin (EVP and CFO) clarified that wildfire cleanup had minimal Q3 impact, totaling $115 million in revenue for the year, with higher flow-through. She explained the landfill impairment was due to a long-term expansion pursuit not moving forward. Tara Hemmer (Chief Sustainability Officer) stated the plastics film plant (Natura) was idled due to market conditions but could restart. Jim Fish (CEO) detailed 2026 free cash flow drivers, including winding down sustainability investments, strong legacy business performance, reduced fleet capital expenditures, and significant contributions from WM Healthcare Solutions. Tara Hemmer also addressed sustainability targets, noting renewable energy is on track for 2025, with RIN sales deferred to Q4, and recycling EBITDA growth despite commodity price declines, maintaining confidence in the 2027 target.

Tyler Brown of Raymond James Financial sought clarity on the 'lifetime customer value' messaging, the updated 2027 synergy target for Stericycle, its CapEx profile, and the assumptions behind the long-term free cash flow guidance regarding taxes.

Answer

CEO Jim Fish explained that 'lifetime customer value' is about service differentiation through technology, which then supports pricing power. SVP Rafael Carrasco confirmed the synergy target includes $50M in cross-sell opportunities. EVP & CFO Devina Rankin noted the healthcare business's long-term capital intensity will be lower (around 8.5% of revenue) and clarified the long-term FCF guidance did not assume bonus depreciation benefits.

Tyler Brown asked for the specific amount of synergy capture included in the Q1 EBITDA for WM Healthcare Solutions and sought clarification on the updated annual synergy guidance. He also questioned if the sustainability business (RNG and recycling) was on track to meet its incremental EBITDA targets and confirmed there were no tariff-related CapEx delays.

Answer

Executive Rafael Carrasco reported $16 million in synergy value was realized in Q1. EVP and CFO Devina Rankin clarified the guidance of $80-$100 million was to signal that $90 million is the most likely outcome. Executive Tara Hemmer confirmed the sustainability business is performing on plan, with equipment procured in advance, avoiding any tariff impacts on project schedules or costs.

Tyler Brown inquired about the confidence level regarding a vote on the federal surface transportation reauthorization bill by spring, seeking insights from lawmakers on its momentum. He also asked for details on the rollover M&A revenue to model for fiscal year 2026 and whether these acquisitions would be neutral, accretive, or dilutive to margins. Additionally, he sought clarification on cash flow from operations expectations for fiscal year 2026, especially after a potentially slower finish in fiscal year 2025, and whether the company still expects to be a de minimis cash taxpayer in the coming years.

Answer

CEO Jule Smith stated that the reauthorization bill is bipartisan, and while the government shutdown delayed progress, lawmakers are now targeting a spring vote for an October 1st fiscal year start. CFO Greg Hoffman detailed that fiscal year 2025 acquisitions would contribute $240 million-$250 million in rollover revenue, with fiscal year 2026 acquisitions adding another $200 million, and the combined impact is expected to be neutral to projected 2026 margins. Jule Smith added that recent acquisitions have maintained good margins. Greg Hoffman confirmed expectations for cash flow from operations to be 75%-85% of EBITDA in fiscal year 2026, noting that strong Q4 2025 performance pushed some cash outflow into the next year. He also confirmed no change in the expectation of being a de minimis cash taxpayer, citing a $15 million-$20 million savings from a recent bill and $5 million in cash taxes for fiscal year 2025.

Tyler Brown inquired about the confidence level for a spring vote on the surface transportation reauthorization bill, the projected rollover M&A revenue for fiscal 2026 and its margin impact, and the outlook for cash flow from operations and cash taxes.

Answer

Jule Smith (CEO) stated that infrastructure funding remains bipartisan, with lawmakers aiming for a spring vote on the reauthorization bill for an October 1 fiscal year start, despite delays from the government shutdown. Greg Hoffman (CFO) projected $240M-$250M in rollover revenue from 2025 acquisitions and an additional $200M from 2026 acquisitions, expecting a neutral impact on 2026 margins. He confirmed expectations for 75%-85% EBITDA conversion to cash flow from operations and continued de minimis cash tax payments, noting a $15M-$20M savings in 2025.

Tyler Brown of Raymond James Financial inquired about Construction Partners' ability to achieve record margins despite severe weather, the meaning of 'full utilization' for future growth, the expected M&A revenue contribution, and whether the company plans to reset its long-term targets after reaching them two years early.

Answer

CEO Jule Smith credited the strong margins to the company's three strategic levers (better markets, vertical integration, scale) firing on all cylinders. He clarified that 'full utilization' reflects a full work schedule, not a capacity constraint. CFO Greg Hoffman provided M&A revenue guidance, projecting $270-$280 million in Q4 2025 and a $240-$250 million rollover into fiscal 2026. Executive Chairman Ned Fleming confirmed that the company will update its long-term targets in the coming months, emphasizing their focus on compounding wealth through strategic, long-term decisions.

Tyler Brown asked for the incremental revenue contribution from M&A in the fiscal 2025 guidance. He also questioned if the move into Texas and Oklahoma signaled a lack of opportunities in heritage markets and inquired about the strategy for the new Oklahoma platform and the role of liquid asphalt terminals.

Answer

CFO Gregory Hoffman quantified the total revenue from acquisitions for the year at approximately $730-$750 million. Executive F. Smith countered that significant 'white space' and opportunities remain in their heritage states, as evidenced by the recent Mobile acquisition. Executive Chairman Ned Fleming added that the M&A pipeline is stronger than ever. F. Smith confirmed the Oklahoma acquisition is a platform for future growth and that liquid asphalt terminals are a key part of their vertical integration strategy.

Tyler Brown from Raymond James inquired about Waste Connections' capital allocation strategy, specifically the balance between M&A and recent share buybacks. He also sought clarification on the M&A pipeline and the performance of the E&P business.

Answer

CEO Ronald Mittelstaedt clarified that the recent share repurchases were opportunistic responses to stock dislocations and not a change in capital allocation strategy, emphasizing the company's capacity for both M&A and buybacks. He confirmed a $100-200 million M&A pipeline is based on revenue. CFO Mary Whitney added that the E&P business run-rate is approximately $160-170 million per quarter, reflecting growth in Canada offsetting softness in the U.S.

Tyler Brown of Raymond James asked about the impact of recent HSR rule changes on M&A, the components of the Q1 volume decline, real-time landfill tonnage for April, and the drivers of record-low safety incidents.

Answer

Executive Ronald Mittelstaedt stated that new HSR rules do not affect the company's typical smaller acquisitions. CFO Mary Anne Whitney clarified that Q1 volumes showed sequential improvement when normalized for weather. Mittelstaedt provided positive April landfill data and attributed record safety performance to cultural changes and improved coaching, noting that related insurance savings are a lagging benefit expected in 2026.

Tyler Brown asked for clarification on the moving pieces of cash flow, specifically regarding green CapEx and Chiquita Canyon landfill expenses, and inquired about the outlook for solid waste volumes turning positive.

Answer

CFO Mary Anne Whitney confirmed the CapEx and Chiquita spending timelines, noting the bulk of RNG project spending will occur in 2025 and Chiquita costs will step down significantly by 2026. Executive Ronald Mittelstaedt explained that negative volumes are a conscious trade-off for higher pricing, a result of shedding unprofitable contracts from acquisitions, and a reflection of a flat economic environment. He emphasized that for volumes to turn positive, M&A would need to decelerate, which is not their current strategy.

Tyler Brown asked whether a potential change in the U.S. administration could create an opportunity for the trucking industry to revisit the broader use of triple trailers.

Answer

President & CEO Marty Freeman responded that the possibility is 'yet to be seen' but remains hopeful for future discussions. He noted that while broader use of triples is uncertain, ODFL is already taking steps to improve linehaul efficiency, such as building a new hub that will accommodate Rocky Mountain doubles on the Turnpike.