Republic Services RSG Q4 2025 Earnings Transcript

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Date

Tuesday, Feb. 17, 2026 at 5 p.m. ET

Call participants

• Chief Executive Officer — Jon Vander Ark
• Chief Financial Officer — Brian DelGhiaccio
• Vice President, Investor Relations — Aaron Evans

Takeaways

• Revenue growth -- 3.5% full-year increase, with fourth quarter organic growth driven by a 3.7% average yield on total revenue and a 4.5% average yield on related revenue.
• Adjusted EBITDA -- Nearly 7% year-over-year growth during 2025; margin expanded 90 basis points to 32% for the full year.
• Adjusted earnings per share -- $7.02 for the year.
• Adjusted free cash flow -- $2.43 billion in 2025, with free cash flow conversion rising 200 basis points to 45.8%.
• Customer metrics -- Customer retention rate held at 94%, with net promoter score improving.
• Volume trends -- Organic volume declined 1% in the fourth quarter, with declines more pronounced in construction, manufacturing, and underperforming residential business lines.
• Environmental solutions -- Organic revenue decreased total revenue by 2% in the fourth quarter, primarily due to a large emergency response job in 2024 that did not repeat.
• Pricing initiatives -- Core price on total revenue was 5.8% in the fourth quarter, with core price on related revenue at 7.1%; open market pricing was 8.7%, restricted pricing 4.6%, small container 8.8%, large container 7.4%, and residential 6.7%.
• 2026 guidance -- Revenue expected between $17.05 billion and $17.15 billion; adjusted EBITDA between $5.48 billion and $5.53 billion; adjusted earnings per share anticipated in the $7.20 to $7.28 range; adjusted free cash flow projected between $2.52 billion and $2.56 billion.
• Acquisition activity -- $1.1 billion was invested in acquisitions during 2025; guidance for 2026 anticipates $1 billion of new acquisitions, with $400 million already completed and included in projections, contributing 70 basis points to 2026 growth.
• Recycling commodity prices -- Fourth quarter average was $112 per ton (prior year: $153), full year at $135 per ton (prior year: $164); current baseline for 2026 guidance is $115 per ton.
• Adjusted EBITDA margin performance -- Fourth quarter margin rose 30 basis points to 31.3%, with margin expansion in the underlying business of 80 basis points offset by decreases from net fuel, recycled commodity prices, and acquisitions totaling 50 basis points.
• Employee metrics -- Engagement score improved to 87; turnover rate achieved the best performance on record.
• Leverage and liquidity -- Total debt was $13.7 billion at year-end, with $2 billion in liquidity and a leverage ratio of approximately 2.6x.
• Tax rate -- Fourth quarter equivalent impact of 16.2%; full-year effective rate was 21.9%; anticipated 2026 equivalent tax impact is 24%, with an adjusted effective rate of 19% and about $190 million in noncash charges from renewable energy equity investments.
• Polymer centers and joint ventures -- $45 million revenue and $10 million EBITDA contribution in 2025; projected to add $30 million revenue and $10 million EBITDA in 2026.
• Renewable natural gas (RNG) projects -- Nine new projects commenced in 2025; four more expected in 2026; estimated to deliver $10 million incremental revenue and $10 million incremental EBITDA in 2026.
• Capital return -- $1.6 billion returned to shareholders in 2025, including $854 million in share repurchases.
• Fleet electrification -- Over 180 electric collection vehicles and 32 charging facilities in operation at year-end; 150 more electric trucks expected to be added in 2026.
• Inflation outlook -- Management projects inflation at approximately 3.5% for 2026.
• First quarter volume guidance -- $25 million January weather impact and overall first-quarter weather impacts of $30 million-$35 million included in forecast.

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Risks

• Organic volume is expected to decrease total revenue by about 1% in 2026, with further residential volume declines projected and ongoing weakness in construction and manufacturing end markets.
• Management cited that the "Volume declines were concentrated to construction and manufacturing end markets, as well as a continued shedding of underperforming residential business."
• Commodity prices for recycling materially declined, averaging $112 per ton in the fourth quarter compared to $153 per ton the previous year.
• "Landfill volumes from wildfire and hurricane cleanup efforts in 2025 create a 60 basis point headwind to organic volume growth in 2026."
• Fourth quarter Environmental Solutions revenue decreased $60 million, with $50 million of that tied to a nonrecurring prior-year emergency response project.
• Employee utilization was below expectations in Environmental Solutions as demand slowed. Labor was retained in anticipation of future growth, impacting short-term productivity.

Summary

Republic Services (NYSE:RSG) reported 3.5% annual revenue growth, nearly 7% growth in adjusted EBITDA, and margin expansion despite unfavorable recycling commodity pricing and volume declines in key end markets. Management highlighted sustained pricing power, strong customer retention, and continued digital and sustainability investments as central to future growth strategies. The 2026 outlook projects low single-digit revenue and earnings growth, with muted volume expectations and guidance incorporating near-term headwinds from prior-year weather events, emergency response project comparables, and commodity pressures. Acquisition contributions and ongoing cost discipline, particularly through AI-enabled operational efficiency, form integral parts of the company’s near- and medium-term margin targets.

• Leadership confirmed $1.1 billion in 2025 acquisitions, with Hamm's disposal infrastructure notably anchoring this year’s pipeline; the current guide incorporates $400 million of closed transactions with a further $600 million targeted but not yet included.
• Fourth quarter core price gains on related revenue reached 7.1%, led by robust open market pricing at 8.7%; restricted pricing and base containers trailed at lower levels.
• Guidance for capital deployment in 2026 includes $1 billion earmarked for acquisitions, with over $400 million already completed and recognized in forward figures.
• Baseline recycling commodity pricing for 2026 is set at $115 per ton.
• Environmental Solutions’ flat full-year growth expectation for 2026 conceals sequential recovery assumptions. Management links improvement to longer sales cycles and future event-driven opportunities.
• Company expects to add 150 electric collection vehicles to its fleet in 2026, advancing stated sustainability commitments.
• Polymer centers contributed $45 million in 2025 revenue; $30 million additional revenue is forecast for 2026, with management describing a stable PET price spread due to product quality despite broad plastics market softness.
• Renewable natural gas (RNG) projects are projected to generate $10 million each of revenue and EBITDA in 2026, on track toward a $100 million revenue and $120 million EBITDA run rate by decade-end.
• Management projects underlying inflation at 3.5% for 2026, targeting yield in excess of cost inflation by 50-100 basis points with relatively uniform impact across cost categories.
• Adjusted free cash flow growth in 2025 was aided by one-time tax benefits. The 2026 effective tax rate is expected to normalize upward due to renewable energy investment accounting effects.

Industry glossary

• Adjusted free cash flow: Cash generated by the business after capital expenditures and adjusted for discretionary and non-recurring items, reflecting funds available for debt repayment, dividends, and acquisitions.
• RNG (renewable natural gas): Methane-rich biogas generated from landfills or other organic waste sources, processed to pipeline-quality and sold as a renewable energy commodity or for transportation fuel.
• Polymer center: Facility for processing and converting recycled plastics, particularly PET, into high-quality feedstock for commercial use, often colocated with joint-venture production operations.
• Environmental solutions: Republic Services’ segment providing specialized services including hazardous and nonhazardous waste remediation, site remediation (e.g., PFAS), and event-based emergency response work.
• Core price: The base rate change (price increase) applied to recurring customers, excluding fuel recovery fees and other variable surcharges.
• Yield on related revenue: Pricing growth realized on revenue segments specifically related to collection, transfer, landfill, and recycling center operations.
• E&P: Exploration and production waste activities, generally related to oil and gas industry service lines and liquid waste streams.

Full Conference Call Transcript

Aaron Evans: Jon Vander Ark, our CEO, and Brian DelGhiaccio, our CFO, are on the call today to discuss our performance. I would like to remind everyone that some information discussed on today’s call contains forward-looking statements, including forward-looking financial information, which involve risks and uncertainties and may be materially different from actual results. Our SEC filings discuss factors that could cause actual results to differ materially from expectations. The material that we discuss today is time sensitive. If in the future you listen to a rebroadcast or recording of this conference call, you should be sensitive to the date of the original call, which is February 17, 2026. Please note that this call is property of Republic Services, Inc.

Any redistribution, retransmission, or rebroadcast of this call in any form without the expressed written consent of Republic Services, Inc. is strictly prohibited. Our SEC filings, earnings press release, which includes GAAP reconciliation tables and a discussion of business activities, along with a recording of this call are available on our website at republicservices.com. In addition, Republic Services, Inc.’s management team routinely participates in investor conferences. When events are scheduled, the dates, times, and presentations are posted on our investor website. With that, I would like to turn the call over to Jon. Thanks, Aaron.

Jon Vander Ark: Good afternoon, everyone, and thank you for joining us.

Aaron Evans: The Republic Services, Inc. team delivered another strong year of performance.

Jon Vander Ark: Reflecting the resilience of our business model,

Aaron Evans: and the power of our differentiating capabilities. We maintained high levels of customer loyalty by consistently delivering premium product and services, effectively managing costs across the business, all while navigating a dynamic macroeconomic backdrop. Our solid earnings growth and meaningful margin expansion reflect our strategy in action and the dedication of our team to create long term value for our customers and shareholders. During 2025, we achieved revenue growth of 3.5%, generated adjusted EBITDA growth of nearly 7%, expanded adjusted EBITDA margin by 90 basis points, delivered adjusted earnings per share of $7.02, produced $2,430,000,000 of adjusted free cash flow, and increased adjusted free cash flow conversion by 200 basis points to 45.8%.

Jon Vander Ark: We remain well positioned to secure new growth opportunities by delivering

Aaron Evans: our differentiated capabilities, customer zeal, digital, and sustainability. With respect to customer zeal, our customer retention rate remains strong at 94%. Our net promoter score continued to improve throughout 2025. This reflects our team’s commitment to delivering exceptional customer value. Fourth quarter organic revenue growth was driven by solid pricing across the business. Average yield on total revenue was 3.7%, and average yield on related revenue was 4.5%. Organic volume declined during the quarter, reducing total revenue by 1% and related revenue by 1.2%. Volume declines were concentrated to construction and manufacturing end markets, as well as a continued shedding of underperforming residential business. Organic revenue in the Environmental Solutions business decreased total revenue by 2% in the fourth quarter.

More than half of this decrease in the Environmental Solutions business related to an emergency response job in 2024 that did not repeat. Turning to digital. We continue to make investments in new technologies and AI-enabled tools that strengthen our competitive position and create measurable value. These capabilities extend across our organization and are expected to unlock incremental growth, enhance profitability, and drive sustained operating leverage. For example, we are deploying advanced analytics to optimize pricing based on specific attributes and local market dynamics. Over time, we expect this will strengthen price retention and reduce customer churn. We are upgrading our RISE digital platform beginning with our large container business.

By applying AI and algorithmic-based routing, we see meaningful opportunities to improve safety, enhance service delivery, and increase route-level productivity, benefits that translate directly into cost efficiency and a better customer experience.

Jon Vander Ark: Additionally, our digital tools are helping us

Aaron Evans: optimize nearly all 11,000,000 customer calls we receive each year. In fact, in 2025 alone, we delivered more than 70,000,000 proactive service notifications addressing our most common customer inquiries such as holiday service schedules and weather-related delays. Within sustainability, we made great progress during the year in the development of our polymer center network and Blue Polymers joint venture facilities. In July, we commenced commercial production at our Indianapolis Polymer Center. This facility is colocated with a Blue Polymers production facility.

Jon Vander Ark: Commercial production began in the Indianapolis Blue Polymers facility during the fourth quarter. We continue to advance renewable natural gas projects with our partners.

Aaron Evans: Three projects came online during the fourth quarter. In total, we commenced operations at nine RNG projects in 2025. We expect four more RNG projects to begin operations in 2026.

Jon Vander Ark: We continue to execute against our industry leading

Aaron Evans: to fleet electrification. We had more than 180 electric collection vehicles in operations, supported by 32 commercial-scale EV charging facilities at the end of 2025. We expect to add another 150 EV collection trucks to our fleet this year to support the continued growth of this differentiated service offering. As part of our commitment to sustainability, we strive to be the employer where the best people want to work.

Jon Vander Ark: In 2025, our employee engagement score

Aaron Evans: which consistently exceeds national benchmarks, improved to 87, and our turnover rate was our best performance on record. Regarding capital allocation, in 2025, we invested $1,100,000,000 in value-creating acquisitions and returned $1,600,000,000 to shareholders including $854,000,000 of share repurchases. Our results clearly demonstrate our ability to create sustainable long term value even while managing through a dynamic market environment. We expect to deliver another year of profitable growth in 2026. More specifically, we expect full year revenue

Jon Vander Ark: in a range of $17,050,000,000 to $17,150,000,000,

Aaron Evans: adjusted EBITDA is expected to be in the range of $5,475,000,000 to $5,525,000,000. We expect to deliver adjusted earnings per share

Jon Vander Ark: in a range of $7.20 to $7.28 and we expect to generate adjusted free cash flow

Aaron Evans: in a range of $2,520,000,000 to $2,560,000,000. Our acquisition pipeline remains strong and supportive of continued activity in both Recycling and Waste and Environmental Solutions. We expect to invest approximately $1,000,000,000 in value-creating acquisitions in 2026. We are already off to a strong start this year with over $400,000,000 of investment in acquisitions to date. Our guidance includes the financial contributions from these acquisitions. At the midpoint, our outlook for 2026 represents revenue growth of 3.1%, adjusted EBITDA growth of 3.6%, adjusted earnings per share growth of 3.1%, and adjusted free cash flow growth of 4.4%. As we have highlighted previously, our 2025 results benefited from landfill volumes related to wildfire and hurricane cleanup efforts.

Absent difficult prior year comparisons created by these nonrecurring projects, the midpoint of our 2026 guidance would indicate nearly 4% top line growth, more than 5% growth in adjusted EBITDA, 50 basis points of EBITDA margin expansion, approximately 6% growth in adjusted earnings per share, and 7% growth in adjusted free cash flow. This level of performance aligns with our long term growth algorithm even as we continue to operate in an uncertain macroeconomic backdrop. I will now turn the call over to Brian, who will provide additional details on the quarter and the year. Thanks, Jon. Core price on total revenue was 5.8% in the fourth quarter.

Core price on related revenue was 7.1%, which included open market pricing of 8.7% and restricted pricing of 4.6%. The components of core price on related revenue included small container of 8.8%, large container of 7.4%, and residential of 6.7%. Average yield on total revenue was 3.7%, and average yield on related revenue was 4.5%. In 2026, we expect average yield on related revenue in a range of 4% to 4.5%, which equates to average yield on total revenue in a range of 3.2% to 3.7%. Fourth quarter volume decreased total revenue by 1% and decreased related revenue by 1.2%.

Volume results on related revenue included a decrease in large container of 3.8% primarily related to continued softness in construction-related activity and manufacturing end markets, and a decrease in residential of 3% due to shedding underperforming contracts. In 2026, we expect organic volume will decrease total revenue by approximately 1%. Keep in mind that landfill volumes from wildfire and hurricane cleanup efforts in 2025 create a 60 basis point headwind to organic volume growth in 2026. Moving on to recycling. Commodity prices were $112 per ton during the fourth quarter. This compared to $153 per ton in the prior year. Recycling processing and commodity sales were flat compared to the prior year.

Increased volumes at our polymer centers and reopening a recycling center on the West Coast offset the revenue impact of lower recycled commodity prices. Full year 2025 commodity prices were $135 per ton compared to $164 per ton in the prior year. Current commodity prices are approximately $115 per ton, which is the baseline used in our 2026 guidance. Fourth quarter total company adjusted EBITDA margin expanded 30 basis points to 31.3%. Margin performance during the quarter included margin expansion in the underlying business of 80 basis points, which was partially offset by a 10 basis point decrease from net fuel, a 20 basis point decrease from recycled commodity prices, and a 20 basis point decrease from acquisitions.

Our full year total company adjusted EBITDA margin was 32%, which represents margin expansion of 90 basis points compared to the prior year. This improvement was driven by margin expansion in the underlying business. The 30 basis point increase to margin from wildfire and hurricane landfill volumes was completely offset by the impact of net fuel, recycled commodity prices, and acquisitions. With respect to Environmental Solutions, fourth quarter revenue decreased $60,000,000 compared to the prior year. Approximately $50,000,000 of this decrease related to an emergency response project in 2024 that did not repeat. Adjusted EBITDA margin in the Environmental Solutions business was 20.1% in the fourth quarter. This level of performance was relatively consistent with our third quarter results.

Total company depreciation, amortization and accretion was 11.6% of revenue in 2025 and is expected to be approximately 11.6% of revenue in 2026. Full year 2025 adjusted free cash flow was $2,430,000,000, an increase of more than 11% compared to the prior year. This was driven by EBITDA growth in the business and cash tax benefits resulting from recently enacted federal tax law. Total debt at the end of the year was $13,700,000,000, and total liquidity was $2,000,000,000. Our leverage ratio at the end of the year was approximately 2.6 times. Based on current interest rates, we expect net interest expense in a range of $575,000,000 to $585,000,000 in 2026.

With respect to taxes, our combined tax rate and impact from equity investments in renewable energy resulted in an equivalent tax impact of 16.2% during the fourth quarter and 21.9% for the full year. The favorable tax rate in the fourth quarter was driven by the timing of tax credits related to equity investments in renewable energy. We expect an equivalent tax impact of approximately 24% in 2026 made up of an adjusted effective tax rate of 19% and approximately $190,000,000 of noncash charges from equity investments in renewable energy. With that, Operator, I would like to open the call to questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. In the interest of time, we ask that you limit yourself to one question and one follow-up question today. If your question has been answered and you would like to withdraw your request, you may do so by pressing star 2. If you are using a speakerphone, please pick up your handset before pressing the keys. The first question is from Patrick Tyler Brown with Raymond James. Please go ahead. Hey, good afternoon, guys.

Aaron Evans: Afternoon, Patrick. Hey, Jon, appreciate the comments on the M&A pipeline, but I am just curious if you can talk a little bit about what you purchased with the $400,000,000 year to date and then what types of assets are in the other $600,000,000? And then, Brian, I assume the $400,000,000 in acquisitions is in the guide, but the $600,000,000 is not. I am assuming that is the way it will be. And then just can you provide what the acquisition contribution will be in 2026 implied in the guide? I know that is a lot. Yeah. No problem. Yeah. Typically, I do not comment on individual deals, but it was public.

So we bought a company called Hamm’s on the west side of Kansas City. Great disposal infrastructure. Great opportunity for us to use that as a basis for further growth. So that was the anchor tenant of the $400,000,000. And of the $600,000,000, an additional that we hit directionally, but we do not know. Again, we know some of the things that are likely in there. We do not know exactly what is in there because we have not closed any of that stuff. So we will update you on future quarters, but feel really good about that mix.

It is predominantly Recycling and Waste, but we have got a number of attractive Environmental Solutions opportunities that we are looking at as well. And I will let Brian talk about the mechanics, the contribution. Yeah. Patrick, you are correct. So we have included the contribution from that, which is already closed, which includes the $400,000,000. And there were other deals besides just Hamm that we closed. With respect to the contribution, so rollover together with those deals it is adding 70 basis points to 2026 growth.

Operator: Okay. Perfect. And then, Brian,

Aaron Evans: if we can talk a little bit about margins because I think the margin guide is, call it, 32.2% based on the midpoint, which I think is 20 basis points up. But there is

Bryan Nicholas Burgmeier: there is quite a bit going on. So can we talk about at the core level? Because we have commodities. We have got the landfill comps. We have got M&A. And then I do not want to get really near-term focused, but can you help us shape Q1 and Q2 because I surmise, again, there is a lot going on. The majority of landfill comp will be earlier in the year. So will margins actually move backwards in the first half? But again, sorry. I know there is a lot there.

Aaron Evans: Yeah. Let me just start with the components because you are right. There are quite a few moving pieces. So 20 basis points at the midpoint there. Call it 60 to 70 basis points of that expansion in the underlying business. With what we have guided to from a $115 per ton, commodity prices would be a 10 basis point drag on margin. Acquisitions, another 10 basis points of drag. And then to your point on those higher margin landfill volumes, that is a 30 basis point drag on margin. So add all that up. That is the 20 basis points at the midpoint.

But, quite strong when you look at the underlying business in that 60 to 70 basis point ZIP code. When you think about the timing, so what I would just say and more of this is having to do with what happened in the prior year.

Bryan Nicholas Burgmeier: So think, you know,

Aaron Evans: slightly positive in Q1, Q2, and Q3 flat to slightly negative just because we are comping those landfill volumes during those two quarters and then most of the margin expansion happening in the fourth quarter.

Bryan Nicholas Burgmeier: Okay. Excellent. Thank you so much. Appreciate it.

Aaron Evans: Absolutely.

Operator: The next question is from Jerry Revich with Wells Fargo. Please go ahead.

Jerry Revich: Yes. Hi. Good afternoon, everybody. I am wondering if we could just talk about the polymer center performance. So nice to hear about the projects being on budget. Can you, Jon, just please provide us an update on how you are thinking about future polymer projects? What is the demand curve look like and overall performance as you folks ramp? Yeah. We are happy with the progress. I am off

Aaron Evans: Vegas. Again, we talked about that having some learning curve in terms of the start up, and that is moving up the curve very nicely. Indianapolis learned from a lot of that benefit, and then Allentown still is up in the air in our third polymer center. There certainly could be a fourth polymer center over time. As you know, right now, plastics is pretty challenged broadly. What has been nice is the spread between the bale we are taking in the front end and the PET we are selling

Operator: has

Aaron Evans: been really stable in part because we are producing a very premium product that is meeting our customers’ needs on that front. So we are going to see how that market evolves. I do not think we will announce any fourth polymer center in the very near term. I think that is more likely than not over time.

Operator: Just

Aaron Evans: testing again how the market evolves. There are some macro factors, obviously, with China on both virgin and recycled PET that are putting downward pressure on pricing that I am hoping those trends are arrested here in the next 12 to 18 months, and I think we will see some upward pressure on plastics. And Jerry, to your question just on performance, when you think about next year, we are expecting about a $30,000,000 revenue uplift from the polymer centers and with about $10,000,000 of incremental EBITDA.

Jerry Revich: Super. Thank you. And can I ask, separately on the RNG side? Nice to hear about the projects coming online. Can you just provide an update on performance from a royalty standpoint and the operating efficiency? We are hearing the industry projects are generally having a harder time getting to the targeted profitability numbers. I am wondering how your projects are tracking in that regard, both from royalty standpoint as well as equity income, if you do not mind sharing.

Aaron Evans: Yeah. There was certainly a delay, which kind of pushed everything a little bit to the right. But now as you heard in our prepared remarks, nine projects coming online in 2025. We expect another four in 2026. So now that we are seeing those projects coming online, we are seeing the financial contribution that we would expect from those projects. So next year, again, just the way the timing works when you think about incremental revenue and EBITDA, about $10,000,000 each of both incremental revenue and EBITDA from those projects. With that accelerating then as we move 2027 and beyond towards the end of the decade.

Jerry Revich: It is good to hear that the profitability is a

Operator: The next question is from Noah Duke Kaye with Oppenheimer & Co. Inc. Please go ahead.

Aaron Evans: Thanks for taking the questions. I want to ask about the organic growth outlook broadly.

Bryan Nicholas Burgmeier: Both in volume components and

Aaron Evans: the yield component. I know apples to apples is always a little bit

Bryan Nicholas Burgmeier: tricky in this space, but it does look like a relatively

Aaron Evans: conservative initial outlook just comparing to some of the peers. Is there anything that you would call out, you know, either on sort of the yield side or what you are seeing in the environment on volumes? We take a relatively more conservative tack.

Jerry Revich: Yeah. I would say from a macroeconomy

Operator: standpoint, I think the macroeconomy

Aaron Evans: characterized as stable. Now moving pieces underneath that, manufacturing, construction have been weaker, which is leading to, you know, we are in the three years, approaching four years of negative demand in Recycling and Waste. So that has been a challenging volume environment. I think in the context of that, the pricing environment has been broadly fairly positive. Now there are spots where you see people around national accounts or some landfill maybe getting a little aggressive on volume. But on balance, I think the industry has performed well over an extended period of really challenging demand. In terms of our own outlook, you know, we are going to be pretty conservative until we see some momentum.

Now there are some positive signs around special waste and certainly in January, the west side of the country would outperform the east side. Some of that is weather.

Bryan Nicholas Burgmeier: So we are

Aaron Evans: you know, cautiously optimistic in terms of the early signs. But in terms of a guide, we are going to wait till we get through the normal seasonality that we see into Q2 before we would take a more optimistic approach to the guidance. Yeah. I guess the follow-up to that, and that makes sense, is just 40 bps underlying volume decline, right, in the midpoint when you back out the landfill volumes. Maybe just help us understand how much of that is kind of further controlled shedding in resi versus anything else? And just if you are seeing in general, your commercial service increases outpacing decreases. Yeah.

I mean, to your point, we do expect residential to be negative in each of the quarters and for the full year in 2026. Okay? So that is certainly, you know, a headwind when you think about that 40 bps that you talked about excluding the landfill volumes. Whereas we do expect some better performance with respect to volume in the other lines of business. And so, you know, again, when you just take the average of those, that is where you get to that negative 40 basis points for the year. Now remember, there are some timing things that you have to take into consideration.

So because of rollover as well as the in-year impact, we would expect to start the year negative, right? So we are guiding to that negative 1% for the year. We would expect to be negative in Q1, a little bit more than that 1%. Same thing for the second and third quarter just because you are comping those landfill volumes in Q2 and Q3 and then to be somewhat flattish by the time we exit the year. That is great color, and that played finally into my last question around Environmental Solutions. Just, you know, we obviously had the tough comp here from the emergency response revenues in 4Q.

Know we have got a little bit left, right, $15,000,000 or so in 1Q, so that makes tough comp. But just help us understand, what have you assumed for that business in terms of total growth in 2026, and how would you see that shaping? Yeah. So for the year, we are relatively flat as far as growth. And to your point, some of that is starting negative in the first half of the year because of some of those tougher comps. And then growth in the second half of the year. And on balance, call it relatively flat on a full year basis. And, Noah, across both businesses. Yeah. Go ahead.

We are going to, you know, pursue volume for sure and pricing. But when forced to choose, we are going to take

Jerry Revich: price.

Aaron Evans: Right? We need to get a return on the work that we do. And we are going to continue to put upward pressure on pricing in both of those businesses over time.

Operator: And so the implication of that would, again, be in national accounts, be in residential, be in landfill. We are going to take that disciplined

Aaron Evans: approach and, again, broadly happy with how we performed in the context of a pretty tough macro environment over the last couple of years. Hey. Hey. Thanks for all the color, I will turn it over.

Operator: The next question is from Bryan Nicholas Burgmeier with Citi. Please go ahead.

Aaron Evans: Good afternoon. Thanks for taking the question.

Bryan Nicholas Burgmeier: You know, I think you

Kevin Chiang: said you are looking for about 60 to 70 basis points of underlying margin expansion this year. Wondering if maybe just from a high level, you could

Bryan Nicholas Burgmeier: touch on your

Kevin Chiang: inflation expectations across some of the major buckets, you know, labor, maintenance, repair, that would be pretty helpful.

Aaron Evans: Yeah. Overall, we are expecting an inflationary environment around 3.5%. So again, when you think about that yield on related revenue of 4% to 4.5%, you are getting that 50 to 100 basis points of price in excess of cost inflation. And by bucket, I would sit there and say they are relatively close to the average. Some might be a little bit above, some a little bit below, but on average, call it in that 3.5% range.

Toni Michele Kaplan: Okay. Got it. Got it. Now that is

Kevin Chiang: really helpful. And then maybe just following up on Noah’s question, hopefully not too redundant, is just getting you a sense of Environmental Solutions kind of progressing from 4Q into the first half. I think you talked about kind of rebuilding the pipeline and maybe some sequential improvement from, like, August to October. Obviously, the macro is not our friend right now, but just kind of gauge that sequential recovery maybe into 2026. Thank you.

Aaron Evans: Yeah. I feel really good about the team’s actions and discipline. Keep in mind, a lot of this can be a longer sales cycle business, whether it is recurring revenues or event-based work because of the compliance nature of the business. So

Operator: you know, jobs that we are working on now or winning now

Aaron Evans: may not show up until Q3, Q4, even into Q1 of next year, which, you know, plays into what Brian talked about, the first half having a pretty conservative posture and seeing more momentum in the second half of the business.

Operator: And keep in mind, like,

Aaron Evans: you know, emergency response has always been part of the business. It was a historically low emergency response year last year. Right? We have seen little yet, but those things can emerge, and those are always nice tailwinds for the business. Again, they typically, you know, happen in, you know, not huge chunks, but in chunks. But last year across the industry, it was just a very low year. So we get a little momentum there, and we could certainly run past the guide.

Kevin Chiang: Great. Thanks a lot. I will turn it over.

Operator: The next question is from Kevin Chiang with CIBC. Please go ahead.

Kevin Chiang: Hi, thanks for taking my question. Maybe if I could just follow on Environmental Solutions there. Look, you still held the margins

Operator: pretty well, low 20% despite some of the revenue pressures you mentioned. Just as we think about that revenue recovering, just how do you think about incremental margins? Did it come back maybe a little bit better than you expected? It seems like you are holding costs pretty nicely here in some of this tougher macro.

Aaron Evans: Yeah. I would say they will be strong. Certainly, we are holding costs, and we have done a good job of cost control, but we are also holding people. Again, we have to be ready to serve our customers. And so our labor utilization is lower than we would expect over the last couple quarters, and, you know, we have done some fine-tuning in places, but have certainly not optimized for the short term because we know there will be momentum and growth coming back in the business. And so you will see very attractive margins on the increment as we continue to grow in the business. And then just on the AI

Kevin Chiang: in 2025. Just wondering, as you think about

Operator: guess, over the longer term and you utilizing those technologies, maybe where you think

Jerry Revich: that can go from a cost efficiency perspective.

Aaron Evans: Yeah. We will do a little more work here and give you specific numbers, but these are going to be, over time, this is going to be, you know, cost improvements measured at nine figures for sure. I mean, there is a lot of efficiency that we can drive through, and one minute across our system a year of routing our efficiency on our routing side is worth $4,000,000 to $5,000,000. You can see how that can accrue as you get optimized traffic patterns and optimized disposal on our routes, and there is a lot of variables today. We do a very good job with the set of tools we have today.

AI is a game changer of taking a lot of complexity and designing routes in a more efficient fashion. You will see some of this on the back office side, and we talked about call centers in the prepared remarks. And just being able to service customers digitally in the way they want, getting them an answer, and saving the cost of having people answering the phone. And then pricing is going to be a third big lever for us, which is getting very surgical on how we price. Again, we do a great job today with our current set of tools.

But as we are now deploying AI, we are getting far more scientific and really understanding customer lifetime value as we price these customers to get a great price today, but also a price that incents them to stay with us for a long period of time.

Operator: That is super helpful. Thanks for taking my questions. The next question is from Adam Bubes with Goldman Sachs. Please go ahead.

Kevin Chiang: Hi, good morning. Sorry, good evening. Just wondering if you could parse out the high-level organic growth performance in Environmental Solutions across the different business lines because there is a lot going on under the hood and understand the $50,000,000 impact from lapping the nonrecurring emergency response project, but hoping to get some color on how the landfill business is performing there, industrial services. You also have E&P. So just trying to get the moving pieces right.

Aaron Evans: Yeah, Adam. So all three of those things you mentioned were down on a year-over-year basis. What I would tell you is the concentration to the landfill and the E&P volumes being down is where you are seeing that fall-through at a very high decremental margin. So that is what is having the largest impact on margin performance. So, but all three of those businesses being down on a year-over-year basis. But, you know, as Jon mentioned, we are well positioned that as those units return into the system, we will capture those units, and we will capture that at a similar margin that they are falling out, you know, that you are seeing in our performance right now.

Kevin Chiang: And then one more on landfill gas. I think you mentioned $10,000,000 incremental EBITDA in 2026. But can you just mark-to-market us on where we are on your realization of the $100,000,000 run rate EBITDA for landfill gas. Is that still the right number to think about? And how are you thinking about timing and the base that we are at today?

Aaron Evans: Yeah. By the time we get done with 2026, we would be at about $40,000,000 of that $120,000,000 that we expect of incremental EBITDA contribution. If you recall, right, the EBITDA exceeds the revenue contribution because of our equity pickup in those projects where we have a joint venture. So full run-rate revenue, $100,000,000, $120,000,000 of EBITDA.

Kevin Chiang: Great. Thanks so much.

Operator: The next question is from John Trevor Romeo with William Blair. Please go ahead.

Aaron Evans: Good afternoon. Thank you for taking the questions. I just had a couple of quick ones, I think, on the Environmental Solutions business. One is just your PFAS remediation business. I would love if you could maybe talk about what kind of revenue you are expecting for that business, maybe this year, and the forward outlook based on what you are hearing from both the regulatory side and the customer demand side, just over the long term opportunity there?

Jerry Revich: Yeah. So this year, we will probably be in the $50,000,000 to $75,000,000 range.

Aaron Evans: Really good ongoing recurring projects with customers where we are going site to site to remediate some of their PFAS. And then in terms of regulatory environment, we are believers that this is going to be a big growth opportunity over time. I think it is going to develop more slowly than it would have under a different administration. And, you know, we are working through the regulations, and we are on both sides of this, obviously. It is a big opportunity for us on the Environmental Solutions side and a growth opportunity for us on the landfill side in Recycling and Waste.

Also, could be a headwind depending on the regulatory framework on the Recycling and Waste side, and we feel, I would say, incrementally positive there in terms of a set of regulations that make sense and that we are not going to be penalized as a passive receiver. K. Thank you for that. And then maybe just sticking with another sort of long term potential opportunity for the Environmental Solutions business, I guess, reshoring as well as, you know, the infrastructure funding and things like that as a medium-term, long-term tailwind. What are customers saying about that? How meaningful do you think any of those benefits could be at this point?

Jerry Revich: Yeah. I think they will be

Aaron Evans: very real. You think about the cheap energy supply we have here and you think about the policy of reshoring manufacturing. I think what we have seen in the very short term is as tariffs have gotten in place and uncertainty around trade policy, there has been a paralysis in terms of investments. People are waiting for the rules to shake out in terms of making bigger capital decisions about where to locate production and their broader supply chains. We are very optimistic that the rules will get settled here over a period of time and that there will be a tailwind from a demand standpoint for Environmental Solutions.

And then also the manufacturing portion of our Recycling and Waste business as well.

John Trevor Romeo: Okay. Thank you very much. I appreciate it.

Operator: The next question is from Toni Michele Kaplan with Morgan Stanley. Please go ahead.

Aaron Evans: Hi, this is Yehuda Silverman on for Toni.

Yehuda Silverman: Just had a quick question about the landfill focus within the M&A strategy. So like recent acquisitions in Kansas and then late in 2025 in Montana. The industry has been sort of trending towards a net landfill closure compared to openings or more pressed landfill airspace expected over the next couple of decades. Can you talk to us a little bit about how the environment has been to get landfill expansions approved or opening up new landfills, and has that shifted the M&A strategy towards perhaps acquiring maybe more landfill assets?

Aaron Evans: We have always been interested in acquiring post-collection infrastructure, recycling centers, landfills, transfer stations, and they are hard to come by, but when we see those opportunities, we will certainly compete for those. Then in terms of landfill expansion, I think it is two very different stories. Siting a brand new landfill is extremely challenging and difficult. Not impossible, but very challenging. Expanding current landfills is very geography dependent, but on balance, we feel very comfortable around our capacity on airspace that we have across our network of 200 plus landfills. And part of that will be over the coming decades, you are going to see more waste moved by rail.

We have got 30 plus years of experience moving waste by rail, and that will be a bigger part of the equation. But we feel really good about our capacity to operate in that environment.

Yehuda Silverman: Got it. And then just a quick follow-up on price-cost spread. Just wanted to hear some of the levers that have been made on the cost side to make it a bit more manageable as pricing continues to moderately step down.

Aaron Evans: One is just the macro inflation. I think what people sometimes lose in the story: the rate of our price increasing is coming down from the peak of inflation in 2022. But our cost is also coming down. Right? The wage increase, the price we pay for parts, the price we pay to expand landfills, improve recycling centers, all of those expenses are also coming down. So we are maintaining the spread between that price and cost, and that is the predominant driver.

Now there are other things we do around productivity, like RISE we have talked about and the efficiencies with AI and other things we do to drive our underlying cost structure and afford us the opportunity to invest in new things like the polymer centers and electrification. So we have compressed certain parts of our cost structure, and we have expanded other ones, which we view as investment in future growth opportunities.

Jerry Revich: Great.

Yehuda Silverman: Thank you.

Operator: The next question is from Michael Feniger with BNP Paribas. Please go ahead.

Kevin Chiang: Hi, good afternoon. Just a

Aaron Evans: quick one on the Environmental Solutions space. Can you just talk about how the Shamrock integration is going? I mean, do you need a pick-up in industrial activity to really get that thing to get that moving? Or can you just talk to how

Operator: you know,

Aaron Evans: your early progress has gone with the integration? Thanks. Yeah. The integration progress is going well. We are really happy about that

John Trevor Romeo: business.

Aaron Evans: A reminder, we bought that because we were already in the business. We were taking industrial water and liquids from our customers, and Shamrock was one of our suppliers. We were also using them for some leachate as well. So we were familiar with that. We had a lot of that material on our back, so we like to be vertically integrated. I really had a lot of respect for Shamrock and what they built. And we will see future growth opportunities in that space. Right? They are predominantly a Southeast-based company, so we will look for other opportunities

Operator: because we see the same value creation opportunity in other regions.

Kevin Chiang: Got it. Thanks. And then just the first quarter volume outlook, does that

Aaron Evans: are you hair-cutting that for weather? Like have you seen a big impact related to the winter storms? I think you referenced the East Coast was relatively rough. Is that kind of baked into your guidance at this point? It is baked into the guide. And, yes, we have seen a pretty significant impact from that. So just in the month of January alone, we are estimating about a $25,000,000 impact from weather. And February experienced weather as well. So that could be a $30,000,000 to $35,000,000 number in the first quarter, but that is embedded in the guide itself. But to your point, from a timing perspective then, Q1 volume will look less because of that.

That will be incorporated into our Q1 performance. Appreciate it, guys. Thank you.

Operator: The next question is from David John Manthey with Baird. Please go ahead. Thank you. Good afternoon, everyone. First question on the emergency response. I think in addition to the lack of jobs that are out there, I think you said last year that you thought maybe there was a gap between

Aaron Evans: the jobs you thought you should win and those that you were winning. Could you just talk about that

Operator: situation? And have you addressed the main sources of the growth gap as you see it?

Aaron Evans: Yeah. I do not think that was limited just towards emergency response. I think that was true for all event-based work and even recurring work. I think we are just getting the price-volume equation right. We had put a lot of upward pressure on price and deservedly so because we want to get paid for the value we deliver. At the same time, the market had moved in terms of the volume situation, and people were getting more aggressive on price. So the team had to adjust. I think the team has done a great job of that. We feel really good about the pipeline. As I mentioned earlier, it is a longer sales cycle business.

Operator: And so we will see the fruits of that labor surface

Aaron Evans: more in the second half of this year and then certainly into next year.

Operator: Okay. And then from a cost standpoint, I guess, the maintenance and repair expenses have been trending well based on refreshing the fleet. But I was also wondering on transportation and subcontractor costs. They basically

Aaron Evans: flat-lined over the past three years. I was just wondering if you could outline what has been the cause of that? Yeah. I think some of that is just when you think about renegotiating some of those contracts, we, you know, I think our procurement department has done a really good job of renegotiating those at favorable rates. Some of that, well, there was a reset a couple years back, you know, coming off the pandemic where you did see a pretty big increase, and now we have modulated to more normal year-over-year increases. Thank you.

Operator: The next question is from Stephanie Benjamin Moore with Jefferies. Please go ahead.

John Trevor Romeo: Great. Thank you so much.

Stephanie Benjamin Moore: I wanted to go back on maybe what you are seeing from an underlying environment. I mean, I think we all saw some of the industrial data points, notably ISM manufacturing PMI kind of inflecting to expansionary for the first time in January for some time. You know, I think the hope is maybe that is a leading indicator for a bit of a recovery here. So curious if you saw or more so maybe had some conversations with any of your customers that would suggest that, you know, that we are maybe warming up a little bit on that side of the business. So any insight there would be helpful. Thanks.

Aaron Evans: I think there are certainly positive signs. I mentioned the west half of the U.S. You are starting to certainly pick up in economic activity. That being said, there are other signs where people are still waiting, and they are still on the sideline waiting for stability of, you know, policy around capital investment. We are seeing still per, you know, we are winning in terms of share on the manufacturing side. But that output in terms of units per facility is still pretty flat. So we are waiting for some upside there. Same thing with construction.

Now construction, given the seasonality of it, we are not going to get a great read for that for another, you know, three to four months. But based on the macro picture of the United States needing more housing, you would certainly feel good about that. And some movement on interest rates. All of that would be a positive sign. Whether that unlocks growth yet, we have been waiting a while and are cautiously optimistic we could see some momentum there as well.

Stephanie Benjamin Moore: Got it. Yep. No. That is super clear. And then I apologize if you said this, but did you give what your underlying kind of inflationary expectations were for 2026?

Aaron Evans: Yeah. It is approximately 3.5%.

John Trevor Romeo: Excellent. Thanks, guys. Thank you. The next question is from Shlomo Rosenbaum with

Operator: Stifel. Please go ahead. Hi. Thank you for taking my questions. I wanted to talk a little bit about what is going on in the C&D with the yields spiking up like 6.5%,

Kevin Chiang: the largest we have seen in a couple of years now. And

Aaron Evans: what are you seeing in the service intervals, small container versus large container quarter over

Kevin Chiang: quarter? And then kind of contrasting that with the volume

Operator: being down so much, was that the comp last

Robert Cameron Wertheimer: year on some of the emergency stuff? Maybe you can talk about that, please.

Aaron Evans: Yeah. The volume, let us start with the volume on the C&D. Some of that is just comping some one-time event jobs that we had in the prior year. I would say when you take a look at that 6.5% and, mind you, this is off of a really small base. So small numbers can actually look a little bit larger than they are. But it is probably a little bit more mix-related than anything else.

If you look at the trend of what we have seen on C&D yield in that circa 4% range, I think that is probably a pretty good indication of where we have been and where we would expect to be here over the next several quarters.

Robert Cameron Wertheimer: Okay. And service intervals?

Aaron Evans: Yeah. Service intervals, if you take a look at that, they have continued to outpace service decreases on that front. There is a little bit of seasonality that we typically see coming into the fourth quarter, but the trend for the full year is we have seen more service level increases than decreases.

Robert Cameron Wertheimer: Okay. And then, just following what was, can you talk a little bit the contribution also from the polymer centers in 2025? And what you is assumed in the outlook? You talked a little bit about RNG, but if it was polymer centers, I must have missed that.

Aaron Evans: Yeah. Polymer center in 2025 added about $45,000,000 worth of revenue and about $10,000,000 of incremental EBITDA.

Robert Cameron Wertheimer: Okay. And expectation for 2026?

Aaron Evans: Would be $30,000,000 of incremental revenue and $10,000,000 of incremental EBITDA.

Robert Cameron Wertheimer: Okay. Thank you very much.

Operator: The next question is from Tobey O’Brien Sommer with Truist Securities. Please go ahead.

Jerry Revich: I am curious what you are

Robert Cameron Wertheimer: seeing in terms of the health care vertical. Hospitals, you know, kind of health care activity seems to be

Aaron Evans: running relatively hot. And just curious to the extent you have got visibility in that issue that you could share with us, that would be helpful.

John Trevor Romeo: Yeah. Well, we

Aaron Evans: compete there on the margin. We do not have a dedicated medical waste business. Small one in Las Vegas. And outside of that, we are out of that space. We certainly service hospitals and other health care providers with Recycling and Waste. And that has been a nice growth driver as we have seen the broader health care spend, you know, go up over time, but not a meaningful growth driver for us. K. If we look at the spread in the margin expansion that you are able to see and kind of put the

James Joseph Schumm: pricing and revenue volume to one side and really focus on the expense side. To what extent do you think you have got opportunities to invest more in tech, extract some savings and efficiencies through AI and other means to, like, restrain your level of expense growth even further and contribute to a, you know, greater spread expansion.

Aaron Evans: Yeah. I mentioned earlier, right, we are spending a lot of money on technology because we see the return clearly. Some of that is AI. Some of that is just modernizing our existing systems and updating that. And I mentioned we think there is, you know, nine figures of opportunity over time on productivity and how we route. We see real opportunities on pricing for the customer. On the cost side, that will be another growth driver.

And then every element of our support, including how we answer calls, how we process orders and invoices, everywhere on the chain, we are challenging how work gets done, and AI is going to be a very powerful tool that is going to show up in terms of compressing our inflation over time.

Operator: At this time, there appear to be no further questions. Jon Vander Ark, I will turn the call back over to you for closing remarks.

Jerry Revich: Thank you, Operator. I want to thank the Republic Services, Inc. team for their great work in

Aaron Evans: 2025. Their focus on safety, sustainability, and exceeding customer expectations led to another year of great results and positions us well for continued success.

Robert Cameron Wertheimer: Have a good evening, and be safe.

Operator: Ladies and gentlemen, this concludes the conference call. Thank you for attending. You may now disconnect.

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