William Griffin

Will Griffin asked about the M&A outlook, specifically if larger opportunities are emerging from the expanded Mid-Atlantic footprint or within the Northeast, and Casella's ability to internalize tons with continued Mid-Atlantic growth. He also inquired about landfill pricing, noting that the 2.5%-3% same-store price increase felt light given Northeast capacity constraints, and asked about the underpinnings of this trend and its future trajectory.

Answer

Ned Coletta, President and CEO, stated it's early for details on larger M&A opportunities but confirmed they are pursuing deals in both legacy Northeast and Mid-Atlantic markets, aiming for $50 million to $100 million revenue deals. Regarding landfill pricing, Ned Coletta explained that while the Northeast is supply-constrained long-term, new rail moves out of New York/New Jersey in recent years had moved tons, putting a 'lid on pricing.' He noted that Casella is now running 'pretty much full' due to successful internalization efforts, shifting the focus back to quality of revenue and advancing pricing.

William Griffin asked for an update on GFL's plans to provide incremental disclosure for its GIP and ES businesses in future quarterly releases to help investors track their performance.

Answer

CFO Luke Pelosi confirmed that GFL plans to provide appropriate levels of disclosure for both GIP and ES going forward, enabling analysts to track their performance, debt levels, and GFL's equity interest. He referenced the current cost basis of roughly $3 billion across the two assets as a fresh starting point.

William Griffin asked for an update on GFL's plans to provide incremental disclosure on the performance of its GIP and Environmental Services (ES) businesses in future quarterly releases, to help investors track their performance.

Answer

CFO Luke Pelosi confirmed that GFL will provide appropriate disclosure going forward, including details on how these businesses are performing, their debt levels, and GFL's equity interest, to enable investors to calculate the underlying value. He noted that the current cost basis for ES was roughly $1.7 billion and GIP around $1 billion, plus an option value on ES.

William Griffin from Barclays inquired about the reasons for the Q4 operating margin step-down across Applied Water, MCS, and WSS, including seasonality and its relation to 80/20 execution tailwinds. He also asked about insights from Xylem's recent report on water demand management for data centers, surprising findings, and Xylem's biggest growth opportunities in this area.

Answer

CFO Bill Grogan clarified that for WSS, the Q4 margin step-down was due to business mix, not structural issues. For Applied Water, it was a 'blip' caused by negative project mix, execution timing, and one-time items, with expectations for margins to return to the 20% range in Q1 and improve sequentially throughout 2026. CEO Matthew Pine highlighted that the 'Watering the New Economy' report revealed water as a significant constraint for AI build-out, with the AI ecosystem needing 30 trillion liters annually by 2050, primarily from power and chip fabrication. He emphasized that solutions like water reuse and leak mitigation exist, and Xylem's biggest growth opportunities are outside data centers, in mining, power generation, and chip fabrication within the WSS segment.

William Griffin asked about the Q4 operating margin step-down across Applied Water, MCS, and WSS, inquiring if it was seasonal and how it relates to ongoing 80/20 execution tailwinds. He also asked about Xylem's recent report with GWI on water demand management for data centers, specifically what surprised them and where the biggest growth opportunities for Xylem might lie.

Answer

CFO Bill Grogan clarified that WSS's Q4 margin was mix-driven, not structural. Applied Water's Q4 was a temporary 'blip' due to negative project mix, execution timing, and one-time items, with expectations for margins to return to 20% in Q1 and improve sequentially. CEO Matthew Pine discussed the GWI report, highlighting that AI's ecosystem (data centers, power, semiconductors) will significantly increase water demand (30 trillion liters by 2050), primarily driven by power and chip fabrication. He emphasized that solutions like water reuse and leak mitigation exist, citing examples like Los Angeles and Intel. Xylem's biggest growth opportunities are outside the data center walls, mainly in the WSS segment, focusing on mining, power generation, and chip fabrication.

William Griffin inquired about the PQI business, specifically if the 'high protein boom' could become a volume driver. He also asked for commentary on Western Europe's geographic performance in Q4, noting a potential year-over-year decline in core growth.

Answer

CEO Jennifer Honeycutt stated that Veralto's CPG markets are stable with solid demand, and new product innovations like UV laser are seeing good interest. She noted that changes in food products, package size, brand/SKU proliferation, and regulatory influences are positive drivers for the coding and marking business, which is a volume game, positioning Veralto well for protein-intensive CPG. CFO Sameer Ralhan attributed the Western Europe Q4 performance to three fewer shipping days compared to the prior year, emphasizing that full-year growth was strong, and Jennifer Honeycutt added that the 60% recurring revenue business is significantly impacted by such base fluctuations.

William Griffin inquired about what Veralto is seeing in the PQI business regarding the high protein boom and if it could be a volume driver. He also asked for commentary on the drivers behind Western Europe's core growth appearing down year-over-year in Q4.

Answer

Jennifer Honeycutt, President and CEO, explained that CPG markets are stable, with solid demand for new products like UV laser. She noted that changes in food products, package size, and regulatory influences are positive drivers for coding and marking volume. Sameer Ralhan, SVP and CFO, attributed the Q4 Western Europe decline to three fewer shipping days, emphasizing that full-year growth was solid. Jennifer Honeycutt added that the recurring revenue business is significantly impacted by base fluctuations.

William Griffin asked about the sustainability business, specifically if the implied $700 million growth EBITDA in 2027, despite being below target, suggests the business is performing ahead of initial expectations when adjusted for lower recycled commodity prices. He also asked for a breakout of the 2026 sustainability growth EBITDA guide between recycling and RNG.

Answer

Executive Advisor Devina Rankin confirmed they are very pleased with the recycling business's performance, with automation investments delivering higher throughput, better price points, and over 30% labor improvement. She clarified that the $700 million relates to growth projects. For the 2026 sustainability growth EBITDA, she stated it's approximately 60% renewable energy and 40% recycling, including royalty.