Waste Connections, Inc. Q4 FY2025 earnings call

• Safety: Employee turnover and safety incident rates declined for the third consecutive year, exiting 2025 at multiyear lows, with safety-related incidents down almost 20% in January 2026 to a record low. - Employee Retention: Achieved 2025 targeted voluntary turnover level of 10%, with momentum for continued gains. - Cost Savings: Ongoing improvements drove cost savings, productivity gains, and improved customer service, with reductions in operating costs in labor, repairs and maintenance, and risk management. - Acquisitions: Closed approximately $330,000,000 in annualized revenue from 19 acquisitions in 2025, with expected 2026 rollover revenue contribution of approximately $125,000,000. - Sustainability: Progressed on renewable gas (RNG) facilities with five online and remainder expected operational by year-end, and broke ground on a state-of-the-art recycling facility expected online in 2027. - AI: Multiyear rollout began in 2025, aimed at enhancing efficiency and productivity through digitizing/automating operations and improving forecasting, with early positive outcomes seen in dynamic routing platform optimization.

In Q4 2025, revenue was $2,373,000,000. For the full year 2025, adjusted EBITDA margin was 33%, up 100 basis points year over year excluding lower commodities. Solid waste core pricing was 6.5% in 2025, exceeding original expectations. Acquisitions completed since the year-ago period contributed about $58,000,000 of revenue in Q4, net of divestitures, bringing full-year net acquisition contribution to $377,000,000. On a same-store basis in Q4, roll-off pulls were down 2%, total landfill tons were up 3%, MSW and special waste both up 4%, while construction and demolition debris was down 4%. For full year 2025, C&D tons were down 5% year over year, special waste was up 7%, and MSW tons were up 3%.

• Revenue in 2026 is estimated in the range of $9,900,000,000 to $9,950,000,000. - Adjusted EBITDA in 2026 is expected in the range of $3,300,000,000 to $3,325,000,000, with adjusted EBITDA margin in the range of 33.3% to 33.4%, up 30 to 40 basis points year over year. - Adjusted free cash flow in 2026 is expected to increase by double-digit percentages to a range of $1,400,000,000 to $1,450,000,000, normalizing for non-core impacts to approximately $1,700,000,000.

• Regulatory Challenges: Chiquita Canyon Landfill's ETLF event faces political challenges with unanticipated regulatory, permitting, legal, etc., requirements. - Commodity Price Fluctuations: Recycled commodity values at multiyear lows impacted margins. - Weather Impacts: Significant cold snap in January 2026 affected business in up to 30 states, though not materially.

Q: Could you elaborate on the sustainability CapEx and Chiquita Canyon outlays cadence and their evolution through 2026 and 2027?

A: Sustainability-related outlays of $100,000,000 include final $75,000,000 for RNG facilities with almost half online and balance expected by year-end, and $25,000,000 for recycle de-risking. Chiquita Canyon outlays are expected to step down, with some outlays from earlier exceeding expectations and others unanticipated, but both expected to step down from 2026 to 2027.

Q: What have you baked in terms of the macro environment and potential sources of upside for 2026?

A: Not baked in any improvement in commodity values, yield impact on volumes (flat to down half a point), and M&A not baked in. Upside could come from improvement in commodity values, improvement in cyclically exposed volumes (special waste pipeline firming, C&D declines moderating), and commercial service increases with net new business up.

Q: Which buckets of expenses are seeing moderation and sustainably trending downward?

A: Labor rates trending down from 5% year over year in 2025 to 3% to 3.5% in 2026, and other costs in P&L trending down from closer to 4.5% in 2025 to 2.5% to 3% in 2026, maintaining price-cost spread.

Q: What exciting tech initiatives are due for implementation in 2026?

A: Two initiatives: dynamic real-time customer routing (moving from static to real-time using AI to react to road closures, traffic, etc.) and a more robust mobile connectivity platform to eliminate 30% to 50% of inbound customer service calls by pushing out real-time info to customers.

Q: How do you assess the M&A pipeline and capital allocation for buybacks in 2026?

A: M&A pipeline has similar opportunity basket as prior years, expecting another out year with no change in appetite, ability, or financial flexibility. Buybacks are opportunistic based on fundamental value, with no communication based on stock price, but active approach maintained.

Q: Update on Northeast rail corridor buildout and landfill gas plants?

A: Arrowhead Landfill in Alabama and intermodal facilities in Eastern Seaboard are seeing growth, with expected 9,000 to 9,500 tons/day into Arrowhead by 2026. Landfill gas plants startup delayed due to permitting, with ramp-up from 40% to 50% efficiency over time, RIN values affecting profitability, but returns still attractive at current values.

Q: Update on Chiquita Canyon leachate production and Seneca Meadows?

A: Leachate production at Chiquita Canyon down from peak of 400,000 gallons/day to 200,000-225,000 gallons/day, indicating downward trend. Seneca Meadows expansion expected to go forward with high confidence, impact on EBITDA minimal if closed compared to Chiquita closure.

Q: Thoughts on Canadian methane emissions regulations?

A: Too early for educated response, but Canadian leadership not concerned based on current understanding.

Q: Organic growth in E&P business in Q4 and modeling for 2026?

A: Outperformed in Q4 with benefits from remediation work in U.S. and outperformance in Canada despite lower rig count and crude values. Modeling for 2026 is flattish, with upside from remediation jobs not repeating every quarter.

Q: Free cash flow drivers and margin expansion headwinds?

A: Free cash flow drivers include incremental EBITDA, decline in Chiquita outlays, and CapEx and cash tax changes. Margin expansion of 50-70 basis points before commodities with no anomalistic headwinds, continuing to work on margin expansion opportunities.

Q: Thoughts on self-driving technology in waste industry?

A: Technology exists, but safety concerns and reactionary scenarios make it a ways off, with professionals likely remaining in cabs for now, but will evaluate as technology evolves.

Q: Update on driver academies and core pricing cadence?

A: Over 60% of driver need expected to go through academies in 2026, with higher retention and lower turnover. Core pricing expected to step down sequentially in 2026, with 65-70% visibility on price increases by Q1.