Republic Services, Inc. Q4 FY2025 earnings call

• Republic delivered strong 2025 performance with revenue growth, adjusted EBITDA growth, and margin expansion. Customer retention rate was 94%, and Net Promoter Score improved. - Invested in digital technologies and AI - enabled tools for competitive advantage, including optimizing pricing, upgrading RISE platform, and improving customer service through proactive notifications. - Made progress in sustainability with polymer center network and Blue Polymers joint venture, and RNG projects. - Commenced commercial production at Indianapolis polymer center and Blue Polymers facility, with 9 RNG projects online in 2025 and 4 expected in 2026. - Employee engagement score improved to 87 in 2025.

In 2025, Republic Services achieved revenue growth of 3.5%. Adjusted EBITDA grew nearly 7%, with an expansion of 90 basis points. Adjusted earnings per share were $7.02, and adjusted free cash flow was $2.43 billion with a conversion of 45.8%. Fourth quarter organic revenue growth was driven by pricing, with average yield on total revenue 3.7% and related revenue 4.5%. Organic volume declined, especially in construction, manufacturing, and underperforming residential. Environmental Solutions business saw a 2% decrease in total revenue in Q4 due to a non - repeating emergency response job. Recycling commodity prices were $112 per ton in Q4, down from $153 per ton prior year. Fourth quarter total company adjusted EBITDA margin expanded 30 basis points to 31.3%, and full - year margin was 32% with 90 basis points expansion. Environmental Solutions revenue decreased $60 million in Q4, with adjusted EBITDA margin 20.1%.

• Expect full - range revenue in 2026 to be $17.05 billion to $17.15 billion. Adjusted EBITDA expected in $5.475 billion to $5.525 billion range. Adjusted earnings per share expected $7.20 to $7.28. Adjusted free cash flow expected $2.52 billion to $2.56 billion. - Midpoint of 2026 guidance indicates 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. - Expect average yield on related revenue in 2026 to be 4% to 4.5%, equating to total revenue yield 3.2% to 3.7%. - Expect organic volume to decrease total revenue by approximately 1% in 2026, with landfill volumes from wildfire and hurricane cleanup in 2025 creating a 60 basis point headwind. - Expect to invest approximately $1 billion in value - creating acquisitions in 2026, with $400 million already invested and contribution adding 70 basis points to 2026 growth.

• Macro - economic uncertainties could impact business performance. - Volume declines in certain end markets like construction, manufacturing, and underperforming residential. - Fluctuations in recycled commodity prices can affect revenue and margin. - Difficulties in acquiring new landfill expansions or significant new projects as they are hard to come by. - Uncertainty around regulatory environment, especially for ES business and potential impact on recycling and waste.

Q: Tyler Brown with Raymond James asked about the $400 million year - to - date M&A, what was purchased and the $600 million, and acquisition contribution.

A: Jon Vander Ark said they bought Hamm in Kansas City, with $400 million including that, and $600 million has some recycling, waste, and ES opportunities. Brian Delghiaccio said the contribution from closed deals including $400 million adds 70 basis points to 2026 growth.

Q: Jerry Revich with Wells Fargo asked about polymer center performance and RNG.

A: Jon Vander Ark updated on polymer centers, with Las Vegas having a learning curve but moving up, and Brian Delghiaccio said 2026 expects $30 million revenue uplift from polymer centers and $10 million incremental EBITDA. For RNG, 9 projects online in 2025, 4 expected in 2026, with $10 million each of incremental revenue and EBITDA expected in 2026.

Q: Noah Kaye with Oppenheimer & Company asked about organic growth outlook.

A: Jon Vander Ark said macro economy is stable but manufacturing and construction are weaker, leading to challenging volume environment, and they are conservative until seeing momentum.

Q: Bryan Burgmeier with Citi asked about inflation expectations and ES progression.

A: Brian Delghiaccio said expecting inflation around 3.5%, and Jon Vander Ark said ES has longer sales cycles, with jobs won now possibly showing up later, and emergency response can be a tailwind.

Q: Kevin Chiang with CIBC asked about ES margins and technology.

A: Jon Vander Ark said ES margins will be strong as they are holding costs and people, and technology like AI will drive cost efficiencies in 9 figures.

Q: Adam Bubes with Goldman Sachs asked about ES business lines and landfill gas.

A: Brian Delghiaccio said Environmental Solutions business lines were down, with landfill and E&P volumes down having large impact on margin, and Brian Delghiaccio said by 2026 landfill gas expected to have $40 million of $120 million incremental EBITDA contribution.

Q: Trevor Romeo with William Blair asked about PFAS remediation and reshoring.

A: Jon Vander Ark said PFAS remediation expected $50 - $75 million in 2026, and reshoring and infrastructure funding are potential tailwinds but timing is TBD.

Q: Yehuda Silverman with Morgan Stanley asked about landfill focus in M&A and price/cost spread.

A: Jon Vander Ark said they are interested in post - collection infrastructure, expanding landfills is geography - dependent, and cost is coming down along with price, with productivity measures like RISE helping.

Q: Seth Weber with BNP Paribas asked about Shamrock integration and first quarter volume.

A: Jon Vander Ark said Shamrock integration is going well, and first quarter volume is baked into guidance with weather impact.

Q: David Manthey with Baird asked about emergency response and transportation/subcontractor costs.

A: Jon Vander Ark said adjusted to price - volume equation, and Brian Delghiaccio said transportation/subcontractor costs are modulated after pandemic reset.

Q: Stephanie Moore with Jefferies asked about industrial data and health care vertical.

A: Jon Vander Ark said there are positive signs in west US, but policy stability needed, and health care is not a meaningful growth driver.

Q: Shlomo Rosenbaum with Stifel asked about C&D yield, service intervals, and polymer centers.

A: Brian Delghiaccio said C&D yield is mix related, service intervals have more increases than decreases, polymer centers in 2025 added $45 million revenue and $10 million EBITDA, and 2026 expects $30 million revenue and $10 million EBITDA.

Q: Tobey Sommer with Truist Securities asked about health care vertical and tech investment.

A: Jon Vander Ark said no dedicated medical waste business, but health care is a growth area, and tech investment will bring 9 figures of opportunity through AI and other means.