Q3 2025 Waste Connections Inc Earnings Call

October 22, 2025

Speaker #3: Ladies and gentlemen , this is the conference operator . Thank you for joining this morning's Waste Connections , Inc. conference call . The call will begin momentarily .

Operator: Ladies and gentlemen, this is the conference operator. Thank you for joining this morning's Waste Connections Inc. conference call. The call will begin momentarily. Once again, we do thank you for joining. Please stay on the line and the call will begin momentarily. Good morning, everyone, and welcome to the Waste Connections Inc. Q3 2025 Earnings Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I'd like to turn the conference over to Ron Mittelstaedt, President and CEO. Sir, please go ahead.

Speaker #3: Once again , we do . Thank you for joining . Please stay on the line and the call will begin momentarily . Good morning , everyone , and welcome to the Waste Connections , Inc. .

Speaker #3: Q3 2020 Earnings Call . All participants will be in a listen only mode . Should you need assistance , please signal a conference specialist by pressing the star key , followed by zero .

Speaker #3: After today's presentation , there will be an opportunity to ask questions . Please also note today's event is being recorded . At this time , I'd like to turn the conference over to Ron Middlestadt , president and CEO .

Speaker #3: Sir, please go ahead.

Speaker #4: Hey . Thank you . Operator . And good morning . I would like to welcome everyone to this conference call to discuss our third quarter results and to provide some thoughts about the remainder of the year and the setup for 2026 .

Ron Mittelstaedt: Okay. Thank you, operator, and good morning. I would like to welcome everyone to this conference call to discuss our Q3 results and to provide some thoughts about the remainder of the year and the setup for 2026. I'm joined this morning by Mary Anne Whitney, our CFO, and several other members of our senior management. As noted in our release, superior execution drove better than expected financial results in Q3, bolstered by continued improvement in operating trends. Another quarterly step-down in employee turnover and new record low safety incident rates, together with strong pricing execution, retention, drove adjusted EBITDA margins of 33.8%, reflecting underlying solid waste margin expansion of approximately 80 basis points in the period. I'm extremely pleased by our team's efforts to overcome incremental commodity headwinds and ongoing uncertainty in the economy in Q3 to achieve the results above expectations.

Speaker #4: I'm joined this morning by Mary Whitney . Our CFO , and several other members of our senior management . As noted in our release , superior execution drove better than expected financial results in the third quarter , bolstered by continued improvement in operating trends .

Speaker #4: Another quarterly step down in employee turnover and new record low safety incident rates , together with strong pricing , execution and retention , drove adjusted EBITDA margins of 33.8% , reflecting underlying solid waste margin expansion of approximately 80 basis points in the period .

Speaker #4: I'm extremely pleased by our team's efforts to overcome incremental commodity headwinds and ongoing uncertainty in the economy . In Q3 to achieve the results above expectations , assuming continuing trends and without further headwinds , we remain well positioned to deliver our full year 2025 outlook as provided in July .

Ron Mittelstaedt: Assuming continuing trends and without further headwinds, we remain well-positioned to deliver our full year 2025 outlook as provided in July. Before we get into much more detail, let me turn the call over to Mary Anne for our forward-looking disclaimer and other housekeeping items.

Speaker #4: Before we get into much more detail, let me turn the call over to Maryann for our forward-looking disclaimer and other housekeeping items.

Speaker #5: Thank you , Ron , and good morning . The discussion today during today's call includes forward looking statements made pursuant to the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995 , including forward looking information within the meaning of applicable Canadian securities laws .

Mary Anne Whitney: Thank you, Ron. Good morning. The discussion today during today's call includes forward-looking statements made pursuant to the Safe Harbor Provisions of the US Private Securities Litigation Reform Act of 1995, including forward-looking information within the meaning of applicable Canadian securities laws. Actual results could differ materially from those made in such forward-looking statements due to various risks and uncertainties. Factors that could cause actual results to differ are discussed both in the cautionary statement included in our 21 October earnings release and in greater detail in Waste Connection's filings with the US Securities and Exchange Commission and the Securities Commissions or similar regulatory authorities in Canada. You should not place undue reliance on forward-looking statements as there may be additional risks of which we are not presently aware or that we currently believe are immaterial, which could have an adverse impact on our business.

Speaker #5: Actual results could differ materially from those made in such forward looking statements due to various risks and uncertainties . Factors that could cause actual results to differ , are discussed both in the cautionary statement included in our October 21st earnings release and in greater detail in Waste Connections filings with the US Securities and Exchange Commission and the Securities Commissions or similar regulatory authorities in Canada .

Speaker #5: You should not place undue reliance on forward looking statements , as there may be additional risks of which we are not presently aware or that we currently believe are immaterial , which could have an adverse impact on our business .

Speaker #5: We make no commitment to revise or update any forward looking statements in order to reflect events or circumstances that may change after today's date .

Mary Anne Whitney: We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change after today's date. On the call, we will discuss non-GAAP measures such as adjusted EBITDA, adjusted net income attributable to Waste Connections on both a dollar basis and per diluted share, and adjusted free cash flow. Please refer to our earnings releases for a reconciliation of such non-GAAP measures to the most comparable GAAP measures. Management uses certain non-GAAP measures to evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate these non-GAAP measures differently. I will now turn the call back over to Ron.

Speaker #5: On the call , we will discuss non-GAAP measures such as adjusted EBITDA , adjusted net income attributable to Waste Connections on a dollar basis and per diluted share , and adjusted free cash flow .

Speaker #5: Please refer to our earnings release for a reconciliation of such non-GAAP measures to the most comparable GAAP measures. Management uses certain non-GAAP measures to evaluate and monitor the ongoing financial performance of our operations.

Speaker #5: Other companies may calculate these non-GAAP measures differently. I will now turn the call back over to Ron.

Speaker #4: Okay . Thank you . Marianne . We are extremely pleased to deliver third quarter results above expectations , demonstrating the durability of solid waste regardless of the economic environment .

Ron Mittelstaedt: Okay. Thank you, Mary Anne. We are extremely pleased to deliver Q3 results above expectations, demonstrating the durability of solid waste regardless of the economic environment. Q3 revenue growth was led by 6.3% core solid waste price, with reported volumes slightly better than expected, down 2.7%. We delivered margins of 33.8%, up 100 basis points year-over-year, excluding the impact of commodities and our decision to close Chiquita Canyon Landfill as of 1 January. Said another way, normalizing for these factors puts our Q3 margins at 34.7% without the benefit of any contribution from positive volumes. As we've said, we remain well-positioned to enjoy the upside from any pickup in volumes from the broader economy, given our asset position and market selection strategy.

Speaker #4: Q3 revenue growth was led by 6.3% for solid waste price , with reported volumes slightly better than expected , down 2.7% . We delivered margins of 33.8% , up 100 basis points year over year , excluding the impact of commodities and decision to close Chiquita Canyon Landfill .

Speaker #4: As of January 1st , said another way normalizing for these factors puts our Q3 margins at 34.7% without the benefit of any contribution from positive volumes .

Speaker #4: As we've said , we remain well positioned to enjoy the upside from any pickup in volumes from the broader economy . Given our asset position and market selection strategy .

Speaker #4: As anticipated , we continue to advance that strategy through acquisition activity , which has continued , and an above average pace , resulting in approximately 300 million in annualized revenues .

Ron Mittelstaedt: As anticipated, we continue to advance that strategy through acquisition activity, which has continued at an above average pace, resulting in approximately $300 million in annualized revenues either closed or under definitive agreement year to date, with more expected in Q4 and by early 2026. We've had some fantastic M&A wins, including two of the largest private companies in Florida, one of which we closed during Q3, with the other signed and expected to close in Q4. Moreover, our operating performance, free cash flow, and balance sheet continue to provide the capacity for outsized acquisition activity and expanded return of capital to shareholders. To that end, our board of directors authorized an 11.1% increase to our regular quarterly cash dividend, our 15th consecutive annual double-digit increase since the initiation of our dividend in 2010.

Speaker #4: Either closed or under definitive agreement . Year to date with more expected in Q4 and by early 2026 . We've had some our fantastic M&A wins , including two of the largest private companies in Florida , one of which we closed during Q3 with the other signed and expected to close in Q4 .

Speaker #4: Moreover , our operating performance . Free cash flow and balance sheet continue to provide the capacity for outsized acquisition activity and expanded return of capital to shareholders .

Speaker #4: To that end, our board of directors authorized an 11.1% increase to our regular quarterly cash dividend. This marks our 15th consecutive annual double-digit increase since the initiation of our dividend in 2010.

Speaker #4: Additionally, as noted on our last call, we've been in the market buying back shares as we take an opportunistic approach to share repurchases and look to capitalize when we see compelling dislocations across the market or within our sector.

Ron Mittelstaedt: Additionally, as noted on our last call, we've been in the market buying back shares as we take an opportunistic approach to share repurchases and look to capitalize when we see compelling dislocations across the market or within our sector. To date, we bought back approximately 2.4 million shares for almost 1% of shares outstanding pursuant to our normal course issuer bid, which were renewed in August, providing for annual repurchases of up to 5% of shares outstanding. Along with executing our growth strategy, we've also shown significant progress towards achievement of our long-term aspirational sustainability-related targets, as highlighted in our recently released 2025 sustainability report.

Speaker #4: To date , we bought back approximately 2.4 million shares , or almost 1% of shares outstanding pursuant to our normal course issuer bid , which were renewed in August .

Speaker #4: Providing for annual repurchases of up to 5% of shares outstanding , along with executing our growth strategy , we've also shown significant progress towards achievement of our long term aspirational sustainability related targets .

Speaker #4: As highlighted in our recently released 2025 Sustainability Report . In fact , we've already achieved several of our initial targets , including emissions reductions , safety performance and recycling .

Ron Mittelstaedt: In fact, we've already achieved several of our initial targets, including emissions reductions, safety, performance, and recycling, being well ahead of our expectations. We continue to challenge ourselves for further progress as we demonstrate that sustainability is integral to our long-term value creation and part of our corporate culture. Most notably, with multiyear reductions of 19% in emissions, our results demonstrate the outsized growth is compatible with the achievement of our long-term aspirational ESG targets. This improvement also applies to employee engagement, where we've seen ongoing reductions during 2025 in voluntary turnover and safety-related metrics. In Q3, voluntary turnover was down for the 12th consecutive quarter for a total reduction of over 55% from the peak in late 2022 and early 2023.

Speaker #4: And well being well ahead of our expectations . And we continue to challenge ourselves for further progress as we demonstrate that sustainability is integral to our long term value creation and part of our corporate culture .

Speaker #4: Most notably, with multi-year reductions of 19% in emissions, our results demonstrate that the outsized growth is compatible with the achievement of our long-term aspirational ESG targets.

Speaker #4: This improvement also applies to employee engagement, where we've seen ongoing reductions in voluntary turnover and safety-related metrics during Q3 2025.

Speaker #4: Voluntary turnover was down for the 12th consecutive quarter for a total reduction of over 55% from the peak in late 22 and early 23 .

Speaker #4: Similarly, safety incident rates have shown continuous multi-year improvement, now down over 25% to new historic lows for the company. The cornerstone of our operating philosophy is that people are our strongest differentiator, so we're excited to see that the level of employee engagement has never been stronger.

Ron Mittelstaedt: Similarly, safety incident rates have shown continuous multiyear improvement, now down over 25% to new historic lows for the company. A cornerstone of our operating philosophy is that people are our strongest differentiator. We're excited to see that the level of employee engagement has never been stronger. As we've maintained, would be the case 2 years ago, we're seeing the benefits of higher employee retention and engagement in our financial results, as evidenced by our 80 basis points of underlying margin expansion in the quarter. With more to come given record safety levels and nearly 3 years of progress. What may be even more compelling is the opportunity ahead as we harness that engagement to leverage technology in new and unprecedented ways, while adhering to the fundamentals that have driven our growth and success.

Speaker #4: And as we've maintained , would be the case two years ago , we're seeing the benefits of higher employee retention and engagement in our financial results .

Speaker #4: As evidenced by our 80 basis points of underlying margin expansion in the quarter , with more to come given record safety levels and nearly three years of progress .

Speaker #4: What may be even more compelling is the opportunity ahead. As we harness that engagement to leverage technology in new and unprecedented ways, while adhering to the fundamentals that have driven our growth and success, along with human capital.

Ron Mittelstaedt: Along with human capital as a differentiator, we're excited to recognize the benefits of using technology to accelerate and expand the reach of our leaders. To that end, we're making long-term investments in technology and infrastructure to maximize their impact and position the company for continued margin expansion. These investments target productivity and efficiency gains as we look to further digitize and automate operations, enhance forecasting through data analytics, and improve service delivery, all while enabling a greater focus on the customer experience. We are already seeing positive outcomes, including improved pricing retention as we expand the utilization of data analytics across multiple platforms. We look to build upon these efforts as we deploy additional applications and expand our efforts in 2026 and 2027.

Speaker #4: As a differentiator . We're excited to recognize the benefits of using technology to accelerate and expand the reach of our leaders . To that end , we're making long term investments in technology and infrastructure to maximize their impact and position the company for continued margin expansion .

Speaker #4: These investments target productivity and efficiency gains as we look to further digitize and automate operations, enhance forecasting through data analytics, and improve service delivery, all while enabling a greater focus on the customer experience.

Speaker #4: We are already seeing positive outcomes , including improved pricing retention as we expand the utilization of data analytics across multiple platforms . We look to build upon these efforts as we deploy additional applications and expand our efforts .

Speaker #4: In 2026 and 27 . Now , before we look ahead , I'd like to pass the call to Marianne to review more in depth the financial highlights of the third quarter .

Ron Mittelstaedt: Now, before we look ahead, I'd like to pass the call to Mary Anne to review more in depth the financial highlights of the Q3.

Speaker #5: Thank you . Ron . In the third quarter , revenue of 2.458 billion was above our outlook and up $120 million , or 5.1% year over year .

Mary Anne Whitney: Thank you, Ron. In Q3, revenue of $2.458 billion was above our outlook and up $120 million or 5.1% year-over-year. Acquisitions completed since the year-ago period contributed about $77 million net of divestitures. Core pricing of 6.3% in Q3 puts us on pace for full year core pricing of approximately 6.5%, which is above our initial expectations coming into 2025 and reflects stronger pricing retention in our competitive regions. Volumes were down 2.7%, similar to Q2, and reflected ongoing purposeful and margin-accretive shedding of low-margin contracts and some price-volume trade-off. Volumes also reflected continued sluggishness in the more cyclically exposed activities. The effects of slower roll-off activity and lower disposal volumes, primarily from construction-oriented activity, were similar to those described in previous periods.

Speaker #5: Acquisitions completed since the year ago period contributed about $77 million , net of divestitures . Core pricing of 6.3% in Q3 puts us on pace for full year .

Speaker #5: Core pricing of approximately 6.5% , which is above our initial expectations coming into 2025 and reflects stronger pricing retention in our competitive region's .

Speaker #5: Volumes were down 2.7% , similar to Q2 , and reflected ongoing , purposeful and margin accretive shedding of low margin contracts and some price volume trade offs .

Speaker #5: Volumes also reflected continued sluggishness in the more cyclically exposed activities . The effects of slower roll off activity and lower disposal volumes , primarily from construction oriented activity , were similar to those described in previous periods .

Speaker #5: As such , we saw a more muted seasonal ramp than would be typical for Q3 looking year over year . In Q3 by line of business .

Mary Anne Whitney: As such, we saw a more muted seasonal ramp than would be typical for Q3. Looking year-over-year in Q3 by line of business on a same-store basis, roll-off pulls were down 1% and rates per pull up 2%, which is a modest improvement from Q2. Year-over-year pulls in most regions were flattish, with our southern regions still down mid-single digits. Markets like Florida and Texas continued to be our weakest, albeit less negative on a year-over-year basis than in previous quarters. Landfill tons were up almost 3%, led by higher MSW tons, up 2%, and special waste tons, up 10%, with some of that increase due to the timing of jobs that were otherwise expected in Q4.

Speaker #5: On a same store basis . Roll off poles were down 1% and rates per pull up 2% , which is a modest improvement from Q2 year over year poles in most regions were flattish , with our southern region still down mid-single digits .

Speaker #5: Markets like Florida and Texas continue to be our weakest, albeit less negative on a year-over-year basis than in previous quarters.

Speaker #5: Landfill tons were up almost 3% , led by higher MSW tons , up 2% , and special waste tons up 10% , with some of that increase due to the timing of jobs that were otherwise expected in Q4 .

Speaker #5: C and D tons , while still negative at down 4% , were better on a comparative basis than in recent quarters as the rate of decline may be moderating or again , as a result of some timing differences .

Mary Anne Whitney: C&D tons, while still negative at down 4%, were better on a comparative basis than in recent quarters as the rate of decline may be moderating or again as a result of some timing differences. We've seen pockets of C&D activity in our markets in our central and southern regions, as well as ongoing special waste activity in certain West Coast markets. Moving next to commodity-related activity. Values for recycled commodities and renewable energy credits, or RINs, continued to slide during Q3, both ending the quarter down 30% to 35% year-over-year. On a combined basis, recycled commodities and landfill gas revenues were down 27% year-over-year on lower pricing, partially offset by contributions at new facilities.

Speaker #5: We've seen pockets of C&D activity in our markets and our central and southern regions, as well as ongoing special waste activity in certain West Coast markets.

Speaker #5: Moving next to commodity related activity values for recycled commodities and renewable energy credits , or Rins , continued to slide during Q3 , both ending the quarter down 30 to 35% year over year on a combined basis .

Speaker #5: Recycled commodities and landfill gas revenues were down 27% year over year on lower pricing , partially offset by contributions at New facilities . Our in-app waste revenues , on the other hand , were up 7% year over year , driven by our production oriented R 60 .

Mary Anne Whitney: Our E&P waste revenues, on the other hand, were up 7% year-over-year, driven by our production-oriented R360 Canada business, while our legacy US business was down nominally year-over-year. adjusted EBITDA for Q3, as reconciled in our earnings release, was $830.3 million, up 5.4% year-over-year and slightly above our expectations. At 33.8%, our adjusted EBITDA margin was up 10 basis points year-over-year and better than expected. This was in spite of an extra 20 basis points drag from the decline in commodities during the quarter, as noted. In the aggregate, lower year-over-year revenues from recycling and RINs resulted in a margin drag of about 70 basis points in the quarter.

Speaker #5: Canada business , while our legacy US business was down nominally year over year . Adjusted EBITDA for Q3 as reconciled in our earnings release was 830.3 million , up 5.4% year over year , and slightly above our expectations at 33.8% .

Speaker #5: Our adjusted EBITDA margin was up ten basis points year over year and better than expected . This was in spite of an extra 20 basis points drag from the decline in commodities during the quarter , as noted in the aggregate , lower year over year revenues from recycling and Rins resulted in a margin drag of about 70 basis points in the quarter .

Speaker #5: Underlying solid waste margins , on the other hand , were up 80 basis points , even better than in recent quarters . Not surprisingly , we once again saw the greatest margin improvement in those areas related to employee retention and lower openings .

Mary Anne Whitney: Underlying solid waste margins, on the other hand, were up 80 basis points, even better than in recent quarters. Not surprisingly, we once again saw the greatest margin improvement in those areas related to employee retention and lower openings. That includes a range of cost categories related to third-party services, including labor and maintenance, parts and repairs. In contrast, we continue to overcome lagging reductions in risk management costs and look forward to unlocking savings for margin expansion in future periods. Net interest expense in the quarter was $79.4 million, and our effective tax rate for the Q3 was 23.6%. Our leverage remains comfortably within our expected range at 2.75x debt to EBITDA.

Speaker #5: That includes a range of cost categories related to third party services , including labor and maintenance , parts and repairs . In contrast , we continue to overcome lagging reductions in risk management costs and look forward to unlocking savings for margin expansion in future periods .

Speaker #5: Net interest expense in the quarter was 79.4 million , and our effective tax rate for the third quarter was 23.6% . Our leverage remained comfortably within our expected range at 2.75 times debt to EBITDA .

Speaker #5: And finally , year to date , we have delivered adjusted free cash flow of $1.84 billion on capital expenditures , up over $135 million year over year , providing visibility for full year adjusted free cash flow .

Mary Anne Whitney: Finally, year to date, we have delivered adjusted free cash flow of $1.084 billion on capital expenditures up over $135 million year-over-year, providing visibility for full year adjusted free cash flow in line with our outlook of $1.3 billion. Assuming continuing trends without further headwinds, there's no change to our full year guidance, which implies Q4 revenue of approximately $2.36 billion and adjusted EBITDA margin up about 90 basis points year-over-year to about 33.3%. With that, I'll turn the call back over to Ron to provide some preliminary thoughts about 2026 before we head into Q&A.

Speaker #5: In line with our outlook of $1.3 billion . Assuming continuing trends without further headwinds , there's no change to our full year guidance , which implies Q4 revenue of approximately 2.36 billion and adjusted EBITDA margin up about 90 basis points year over year to about 33.3% , with that , I'll turn the call back over to Ron to provide some preliminary thoughts about 2026 .

Speaker #5: Before we head into Q&A .

Speaker #4: Thank you . Marianne . As we have described , we are pleased with our year to date results , which not only highlight the strength and resilience of our business , but provide momentum for next year .

Ron Mittelstaedt: Thank you, Mary Anne. As we have described, we are pleased with our year-to-date results, which not only highlight the strength and resilience of our business, but provide momentum for next year. Although we do not provide our formal outlook for 2026 until February, we are able to provide a high-level framework assuming no change in the current economic environment. On that basis, we should be positioned for the following: mid-single-digit revenue growth in 2026 from price-led organic growth in solid waste and approximately 1% revenue carryover from 2025 acquisition activity to date, partially offset by continued headwinds related to commodities. Looking at margins, we remain well positioned for above-average underlying solid waste margin expansion, with offsets expected from margin dilutive impacts from acquisitions and commodities. These combined impacts suggest adjusted EBITDA margin expansion in what we would consider a normalized range.

Speaker #4: Although we do not provide our formal outlook for 2026 until February , we are able to provide a high level framework . Assuming no change in the current economic environment on that basis , we should be positioned for the following mid-single digit revenue growth in 2026 from price led organic growth in solid waste and approximately 1% revenue carryover from 2025 acquisition activity .

Speaker #4: To date , partially offset by continued headwinds related to commodities . Looking at margins , we remain well positioned for above average underlying solid waste margin expansion with offsets expected from margin dilutive impacts from acquisitions and commodities .

Speaker #4: These combined impacts suggest adjusted EBITDA margin expansion in what we would consider a normalized range and depending on the timing of capital expenditures and other outlays , the conversion of adjusted EBITDA to adjusted free cash flow should improve relative to 2025 .

Ron Mittelstaedt: Depending on the timing of capital expenditures and other outlays, the conversion of adjusted EBITDA to adjusted free cash flow should improve relative to 2025. These aforementioned amounts will be positively impacted by the pace and magnitude of ongoing acquisition activity in Q4 and will grow during 2026 as we complete additional M&A. To the extent that we see improvements in commodities and rents values, those impacts would also be additive to these preliminary thoughts. We look forward to having better visibility on the tone of the economy, including any government shutdown or tariff-related implications when we provide our formal outlook in February. We're most grateful and extremely proud of the dedication of our over 25,000 employees and the local leadership teams responsible for the consistency of operational execution.

Speaker #4: These aforementioned amounts will be positively impacted by the pace and magnitude of ongoing acquisition activity in Q4, and will grow during 2026.

Speaker #4: As we complete additional M&A . To the extent that we see improvements in commodities and Rins values . Those impacts would also be additive to these preliminary thoughts .

Speaker #4: We look forward to having better visibility on the tone of the economy, including any government shutdown or tariff-related implications, when we provide our formal outlook in February.

Speaker #4: We're most grateful and extremely proud of the dedication of our over 25,000 employees and the local leadership teams responsible for the consistency of operational execution.

Speaker #4: We're excited to leverage their effectiveness and provide multiyear opportunities to accelerate growth through our investments in technology . We're also proud to welcome Jason Kraft , a long tenured local divisional and regional Waste Connections leader , to the role of chief operating officer .

Ron Mittelstaedt: We're excited to leverage their effectiveness and provide multiyear opportunities to accelerate growth through our investments in technology. We're also proud to welcome Jason Craft, a long-tenured local, divisional, and regional Waste Connections leader, to the role of Chief Operating Officer during the quarter. Jason's strong operational background and business acumen make him an ideal addition to the senior leadership team. We will continue to focus on operational excellence and stay true to our culture, while also welcoming new and innovative ways to drive value creation. As we say, win from within. We appreciate your time today. I will now turn this call over to the operator to open up the lines for your questions. Operator?

Speaker #4: During the quarter . Jason's strong operational background and business acumen make him an ideal addition to the senior leadership team . We will continue to focus on operational excellence and stay true to our culture , while also welcoming new and innovative ways to drive value creation .

Speaker #4: And as we say , win from within . We appreciate your time today . I will now turn this call over to the operator to open up the lines for your questions .

Speaker #4: Operator .

Speaker #3: Ladies and gentlemen , at this time , we'll begin that question and answer session . If you would like to ask a question , please do so by pressing star .

Operator: Ladies and gentlemen, at this time, we'll begin that question-and-answer session. If you'd like to ask a question, please do so by pressing star and then one on your touch tone telephones. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys to ensure the best sound quality. To withdraw your questions, you may press star and two. Once again, that is star and then one to join the question queue. Our first question today comes from Tyler Brown from Raymond James. Please go ahead with your question.

Speaker #3: And then one on your touch tone . Telephones . If you are using a speakerphone , we do ask that you please pick up your handset before pressing the keys to ensure the best sound quality .

Speaker #3: To withdraw your questions, you may press star and two. Once again, that is star and then one to join the question queue.

Speaker #3: Our first question today comes from Tyler Brown from Raymond James . Please go ahead with your question .

Speaker #6: Hey, good morning, guys. Can you hear me?

Tyler Brown: Hey, good morning, guys. Can you hear me?

Speaker #5: Yes .

Speaker #4: Good morning Tyler , we can hear you .

Mary Anne Whitney: Yes. Good morning.

Ron Mittelstaedt: Yeah. Good morning, Tyler. We can hear you.

Speaker #6: Hey . Morning . Hey , Marianne . Just real quick on E&P . I think it was . It was pretty strong . Maybe felt like something was helping there .

Tyler Brown: Hey, morning. Hey, Mary Anne, just real quick on E&P. I think it was pretty strong. Maybe felt like something was helping there. Can you kinda talk about Q3 and then how we should think about run rating that business, maybe not only in Q4, but maybe even into next year?

Speaker #6: Can you kind of talk about Q3 and then how we should think about run rate in that business ? Maybe not only in Q4 , but maybe even into next year ?

Speaker #5: Sure . What I'd say is that , as in Q2 , we saw , you know , nice , steady performance in our production oriented piece of the business , in spite of lower crude .

Mary Anne Whitney: Sure. What I'd say is that, as in Q2, we saw, you know, nice steady performance in our production-oriented piece of the business in spite of lower crude. You know, we talked about a little bit of weakness in our legacy R360 business. What was different about Q3, what was incremental was that there was a sequential increase in that Canadian business, primarily associated with a remediation job. If I were run rating it, I would back out that $10 million, which is what it accounted for.

Speaker #5: And , you know , we talked about a little bit of weakness in our legacy . Our 360 business . What was different about Q3 , what was incremental was that there was a sequential increase in that Canadian business , primarily associated with a remediation job .

Speaker #5: And so I if I were run rating it , I would back out that 10 million , which is what it accounted for .

Speaker #6: Okay . Perfect . 10 million . Okay . Got it . And I appreciate Ron the the early look on 26 . But big picture .

Tyler Brown: Okay, perfect. $10 million. Okay, got it. I appreciate, Ron, the early look on 2026. Big picture, is there really any incremental benefit from the new RNG investments in that EBITDA number, or is that gonna be more of a 2027 number? Based on what we know today, where should that green CapEx come in for 2025? What will remain kind of in 2026 as you sit here today?

Speaker #6: Is there really any incremental benefit from the new RNG investments in that EBITDA number . Or is that going to be more of a 27 number .

Speaker #6: And then based on what we know today , where should that green CapEx come in for 25 ? And then what will remain kind of in 26 as you sit here today ?

Ron Mittelstaedt: Yeah. Yeah, Tyler. First off, there is no incremental RNG revenue or EBITDA of any amount materially in the out to 25 guidance or in the 26 first look. Okay? Nothing there.

Speaker #4: Yes . Tyler . So first off , there is no incremental RNG revenue or EBITDA of any amount materially in the 2025 guidance or in the 26 first look .

Speaker #4: Okay . Nothing there because most of our projects are time to come online . At some point during the fourth quarter . So , you know , there could be a minimis amount .

Tyler Brown: Okay.

Ron Mittelstaedt: Because most of our projects are timed to come online at some point during Q4. There, you know, there could be a de minimis amount, maybe a couple of months in 2026. That benefit's really not till 2027 in revenue, EBITDA, and margin. You know, we originally thought we'd spend between $100 and $150 in CapEx on RNG in 2025. That number is now probably between $75 and $125.

Tyler Brown: Okay.

Speaker #4: Maybe a couple month in 26 . So that benefits really not till 27 . And revenue , EBITDA and margin . And you know we originally thought we'd spend between 100 and 150 in CapEx on RNG in 25 .

Speaker #4: That number is now probably between 75 and 125. So, maybe stepping down about 25 to 35 million. Therefore, there could be 25 to 50 million of green CapEx rollover into 2026.

Tyler Brown: Mm.

Ron Mittelstaedt: Maybe stepping down about $25 to $35 million. There could be $25 to $50 million of green CapEx rollover into 2026.

Speaker #6: Okay . Excellent . Very helpful . And then I just want to make sure that I've got your commentary about 26 margins . So I think you said a more normalized year next year .

Tyler Brown: Okay. Excellent. Very helpful. I just wanna make sure that I've got your commentary about 2026 margins. I think you said a more normalized year next year. That is assuming outsized expansion in solid waste offset based on what we know today by dilutive M&A and dilutive commodities. Is that right?

Speaker #6: That is assuming outsized expansion in solid waste offset based on what we know today by dilutive M&A and dilutive commodities , is that right ?

Speaker #4: That's exactly right . You have it exactly right . Right now , we believe commodities , if they stayed where they are , about a 20 to 25 basis point dilutive impact on a year to year basis and M&A , you know , call that 10 to 15 .

Ron Mittelstaedt: That's exactly right. You have it exactly right. Right now, we believe commodities, if they stayed where they are, about a 20 to 25 basis point dilutive impact on a year-to-year basis, and M&A, you know, call that 10 to 15. You're somewhere between, you know, 30 and 40 that you're overcoming. That, you know, that puts you in that 20 to 40 normalized, which tells you what the underlying is doing.

Speaker #4: So you're somewhere between 30 and 40 that you're overcoming . And so you know that puts you in that 20 to 40 normalized which tells you what the underlying is doing .

Speaker #6: Yeah. Perfect. Okay. And my last one is just a big picture question. And you touched on it, Ron. There's obviously a ton going on in the world of technology.

Tyler Brown: Yeah, perfect. Okay. My last one, just big picture question, and you touched on it, Ron. There's obviously a ton going on in the world of technology, and it sounds like, you know, you guys, and quite frankly, the industry at large, probably stand to benefit from maybe some of the productivity that AI might bring. Can you just talk a little bit about your strategy, where you are in the journey, what kind of tools you're talking about, you know, and is that something that we should see a gift that gives over the next, you know, call it half decade? How should we just think about that broadly? Appreciate it.

Speaker #6: And it sounds like , you know , you guys and quite frankly , the industry at large probably stand to benefit from maybe some of the productivity the AI might bring .

Speaker #6: But can you just talk a little bit about your strategy , where you are in the journey ? What kind of tools you're talking about , you know , and is that something that we should see , a gift that gives over the next , you know , call it half decade or how should we just think about that broadly ?

Speaker #6: Appreciate it .

Speaker #4: Yeah , sure . Well , obviously we are mostly talking about two things . We're mostly talking about , you know , data aggregation amongst historically disparate systems and apps , which are now being aggregated and can speak to each other and provide data analytics that we really haven't had to this degree .

Ron Mittelstaedt: Yeah, sure. Well, obviously, we are mostly talking about two things. We're mostly talking about, you know, data aggregation amongst historically disparate systems and apps which are now being aggregated and can speak to each other and provide data analytics that we really haven't had to this degree. The utilization and overlay in multiple areas of AI to analyze that data and help us in areas of pricing, customer engagement, route optimization, maintenance projectability, and a variety of other things. We laid out in late 2024 sort of a three-year, call it total digitization of the organization by the end of 2027. We are now, you know, call that one-third through that.

Speaker #4: And then the utilization and overlay in multiple areas of , of AI to , to analyze that data and help us in areas of pricing , customer engagement , route optimization , maintenance projects , ability and a variety of other things .

Speaker #4: We laid out in late 24 , sort of a three year , call it total digitization of the organization . By the end of 27 .

Speaker #4: So we are now call that one third through that , we focused heavily on pricing and budgeting , forecasting and planning through the use of AI and data aggregation .

Ron Mittelstaedt: We focused heavily on pricing and budgeting, forecasting, and planning, through the use of AI and data aggregation in 25. For 26, we will be doing the same on sort of route optimization, as we've mentioned, working to sort of what I call Waze for garbage, if you will, from a routing and a real-time routing standpoint rather than a static routing, as well as, you know, a dramatically enhanced, mobile application, and a complete revamp of our maintenance, software and its integration to our operating system. And then there are additional plans for 27. You know, I think those. You know, I think it's too early to know exactly what that does, margin wise.

Speaker #4: In 25 for 26 , we will be doing the same on sort of route optimization . As we've mentioned , working to sort of what I call ways for garbage .

Speaker #4: If you will , from a routing , a real time routing standpoint rather than a static routing as as well as , you know , a dramatically enhanced mobile application and a complete revamp of our maintenance software .

Speaker #4: And it's integration to our operating system . And then there are additional plans for 27 . So , you know , I think those I think it's too early to know exactly what that does margin wise .

Speaker #4: It's obviously they are all a margin lift . And continuing to help us with , you know , outsized margin expansion . But I can tell you the first 2 to 3 things that we have done in late 24 and 25 , there's been a very , very rapid payback on those investments .

Ron Mittelstaedt: It's obviously they are all a margin lift and continuing to help us with, you know, outsized margin expansion. I can tell you the first two to three things that we have done in late 2024 and 2025, there's been a very, very rapid payback on those investments, and we're, you know, surprised at the magnitude of the impacts, favorably surprised.

Speaker #4: And and we're , you know , surprised at the magnitude of the impacts favorably surprised . So I would tell you that , you know , looking out , as you said , maybe over a half decade of 4 to 5 year period , we should continue to see those .

Tyler Brown: Mm.

Ron Mittelstaedt: I would tell you that, you know, looking out, as you said, maybe over a half decade, a four to five-year period, we should continue to see those. I'd say those impacts are more in the two to three-year period, we should see most of the benefit from.

Speaker #4: And I'd say those impacts are more in the 2 to 3 year period. We should see most of the benefit from.

Speaker #4: .

Speaker #6: Interesting. Okay. Thank you.

Tyler Brown: Interesting. Okay. Thank you.

Speaker #3: Our next question comes from Noah . Noah Kaye from Oppenheimer and Company . Please go ahead with your question .

Operator: Our next question comes from Noah Kay from Oppenheimer and Company. Please go ahead with your question.

Speaker #7: Hi . Good morning . Thanks for taking him . I'll pick up on Tyler's last question around . Really ? The runway for accelerating or improving pricing retention from some of these changes in tools .

Noah Kaye: Good morning. Thanks for taking them. I'll pick up on Tyler's last question. Around really the runway for accelerating or improving pricing retention from some of the changes in tools. What are you specifically thinking about in price for 2026, based off of, you know, the restricted and, you know, where you expect to be on open, and how much does this effort contribute to that?

Speaker #7: What are you specifically thinking about in price for ? For 26 , based off of , you know , the restricted and where you expect to be on open and and how much does this effort contribute to that ?

Speaker #5: Well, no, I'd actually start in 2025 because we already said that we've actually been using this tool and been applying it this year, deploying it this year.

Mary Anne Whitney: Well, Noah, I'd actually start in 25 because we already said that we've actually been using this tool and been applying it this year, deploying it this year. As you'll recall, we had initially guided to pricing of around 6%, and we've ended up giving you an updated guidance for 6.5%. That improved pricing retention we would attribute in part to the tool that we've been deploying. We'd also acknowledge that those improving metrics on the operating stats, like having, you know, our seats full and retention better, lower turnover, that also contributes to the, you know, to pricing retention. I'd say that gives you a flavor for the kind of benefit we're seeing. A portion of it we would attribute to that tool.

Speaker #5: And as you'll recall , we had initially guided to pricing of around 6% . And we've ended up giving you an updated guidance for 6.5% .

Speaker #5: And so that improved pricing retention . We would attribute in part to the tool that we've been deploying . And we'd also acknowledge that those improving metrics on the operating stats , like having our seats full and retention better , lower turnover , that also contributes to , to pricing retention .

Speaker #5: So, I’d say that gives you a flavor for the kind of benefit we’re seeing. A portion of it we would attribute to that tool.

Speaker #5: So then when we think longer term , we think about really the life cycle of the customer and be able to hold on to customers by putting in smart price increases and minimizing the amount of customer loss .

Mary Anne Whitney: When we think longer term, we think about you know, really the life cycle of the customer and being able to hold on to customers by putting in smart price increases and minimizing the amount of customer loss, and of course, rollbacks. We think of it as taking some pressure off using the pricing lever to drive that price cost spread and being incremental, you know, as we've demonstrated this year, for the possibility that there's upside when we go into a year. To your specific question about how we're thinking about next year, as you know, Noah, we think in terms of the two pieces. There's the CPI-linked markets, and, you know, that's a lagging CPI adjustment, which, you know, over the past year, those increases have been smaller than in the prior years.

Speaker #5: And of course , rollbacks . And so we think of it as taking some pressure off using the pricing lever to drive that price .

Speaker #5: Cost spread and being incremental as as we've demonstrated , this year for the possibility that there's upside when we go into a year for your specific question about how we're thinking about next year as , as you know , Noah , we think in terms of the two pieces , as the CPI linked markets and , you know , that's a lagging CPI adjustment , which , you know , over the past year , those increases have been smaller than in the prior year .

Speaker #5: So you'd expect less price in those CPI linked markets . And then the real question becomes what are cost pressures doing and how much price do we need in .

Mary Anne Whitney: You'd expect less price in those CPI-linked markets. The real question becomes: what are cost pressures doing, and how much price do we need in our unrestricted markets? How effective are those price increases? I think all of that could sort of inform you directionally that the expectation is needing less price in 2026 than we did in 2025. Of course, the particulars, the specifics of that we'll give when we give our guidance in February.

Speaker #5: Our unrestricted markets . And then how effective are those price increases . And so I think all of that could sort of inform you directionally that the expectation is needing less price in 26 than we did in 25 .

Speaker #5: But of course, the particulars and specifics of that will be given when we provide our guidance in February.

Speaker #4: And no , I would just add that , you know , the expectation is still 150 to 200 basis point price cost spread is , is is directionally how you should think of that .

Ron Mittelstaedt: No, I would just add that, you know, the expectation of still 150 to 200 basis point price cost spread is directionally how you should think of that. Our confidence level of achieving that, I think has improved with the utilization of the AI tool that we've been working on for the past year plus. You know, if we have a lower gross price and a higher net price with lower customer churn, we believe that can ultimately pull 50 to 100 basis points out of that reported volume number, meaning improving it. Because right now we're getting a trade-off of probably, you know, up to a point for up to about 100 to 150 basis points more that we're pushing price.

Speaker #4: And our confidence level of achieving that . I think has improved with the utilization of the AI tool that we've been working on for the past year .

Speaker #4: Plus . So , you know , if we have a lower gross price and a higher net price with lower customer churn , we believe that can ultimately pull 50 to 100 basis points out of that reported volume number , meaning improving it , because right now we're getting a trade off of probably , you know , up to a point for up to about 100 to 150 basis point more that we're pushing price .

Speaker #4: So as , as , as we can pull that down and offset that churn , that is , you know , that layers for us in the , you know , the organic growth number as well .

Ron Mittelstaedt: As we can pull that down and offset that churn, that is, you know, that layers for us in the, you know, the organic growth number as well.

Speaker #7: Very interesting . Thanks . Thanks , Ron . Thanks , Marion . You mentioned the I guess the 50 million potential year over year benefit from Lower green CapEx to free cash flow in 26 .

Noah Kaye: Very interesting. Thanks Ron. Thanks Marianne. You mentioned, I guess the $50 million potential year-over-year benefit from lower green CapEx to free cash flow in 2026. Just what are some of the other puts and takes that, you know, we should be thinking about in our models for free cash flow conversion?

Speaker #7: Just what are some of the other puts and takes that we should be thinking about in our models for free cash flow conversion?

Speaker #5: Well , of course , no , we need to get through this year to to . So , you know , we know the timing of CapEx .

Mary Anne Whitney: Well, of course, Noah, we need to get through this year to, you know, we know the timing of CapEx. We've talked about taking advantage of bonus depreciation by potentially adding CapEx as we exit 25 for fleet and equipment. You should expect us to be looking at that. That'll inform our thinking about 26. As we said, the green CapEx will inform it and ultimately what we guide to for EBITDA. All of those things will together inform our thinking about what the moving pieces are for 26.

Speaker #5: We've talked about taking advantage of bonus depreciation by potentially adding CapEx as we exit 25 for fleet and equipment . You should expect us to to be looking at that .

Speaker #5: That will inform our thinking about 26 . As we said , the green CapEx will inform it and ultimately , what we guide to for EBITDA , all of those things will together inform our thinking about what the moving pieces are for 26 .

Speaker #7: Okay, I'll leave it there. Thank you.

Noah Kaye: Okay, I'll leave it there. Thank you.

Speaker #3: And our next question comes from Kanak Gupta from Scotiabank . Please go ahead with your question .

Mary Anne Whitney: Thanks.

Operator: Our next question comes from Konark Gupta from Scotiabank. Please go ahead with your question.

Speaker #8: Good morning . And thanks for taking my questions . Just want to kind of follow on the last question about free cash flow .

Konark Gupta: Good morning, thanks for taking my questions. Just wanna kind of follow on the last question about free cash flow. I think one of the other moving parts, you know, I think last couple of years at least, has been the Chiquita related outlays. Can you update us on where the Chiquita situation today is in terms of your remediation obligations, and how do you expect those outlays to trend in the next year or so? Also maybe update on where the litigation currently sits there.

Speaker #8: So I think one of the other moving parts , you know , I think last couple of years at least has been the related outlays .

Speaker #8: So can you update us on where the Shigeta situation today is in terms of your remediation obligations ? And how do you expect those outlays to trend in the next year or so ?

Speaker #8: And then also maybe update on where the litigation currently sits there ?

Speaker #4: Sure . I'll take a crack at this for you . So yeah , we would tell you that overall the mitigation and treatment of the reaction or what we call the atlf is actually going about as we expected , or maybe in ways even a little better .

Ron Mittelstaedt: Sure. I'll take a crack at this for you. Yeah, we would tell you that overall the mitigation and treatment of the reaction or what we call the ETF is actually going about as we expected or maybe in ways even a little better. We continue to make progress on the removal of the leachate from the landfill that is being generated by the reaction, and that amount continues to drop quarter-to-quarter. We peaked at handling over 400,000 gallons a day, and we are now handling about 220,000 to 240,000 gallons a day in real time.

Speaker #4: We continue to make progress on the removal of the leachate from the landfill that is being generated by the reaction , and that amount continues to drop quarter to quarter .

Speaker #4: We we peaked at handling over 400,000 gallons a day , and we are now handling about 220 to 240,000 gallons a day in real time .

Speaker #4: And and at that 220 to 240,000 gallons a day , we are reducing the level of leachate within the landfill itself , which tells us that we are on the back side of the reaction curve because we're now effectively outrunning the reaction generation , whereas a year ago , the reaction generation was outrunning us .

Ron Mittelstaedt: At that 220,000 to 240,000 gallons a day, we are reducing the level of leachate within the landfill itself, which tells us that we are on the backside of the reaction curve because we're now effectively outrunning the reaction generation, whereas a year ago, the reaction generation was outrunning us. Those are some very good signs. We have completely capped with about 42 acres of synthetic liner, the reaction area. We have voluntarily agreed to cap an additional 50 acres over the next 3 years, preventatively, and at the request of agencies, and we agree with that. We are complete drilling of all of the extraction wells and implementing all of the submersible pumps to remove the liquid.

Speaker #4: So those are some , some , some very good signs . We have completely capped with about 42 acres of synthetic liner . The reaction area we have voluntarily agreed to cap an additional 50 acres over the next three years .

Speaker #4: Preventatively and at the request of agencies , and we agree with that . And we are complete drilling of all of the extraction wells and implementing all of the submersible pumps to remove the liquid .

Speaker #4: So and we have dropped by over 95% , the registered odor complaints that are monitored through local agencies and the state of California Air Board .

Ron Mittelstaedt: And we have dropped by over 95% the registered odor complaints that are monitored through local agencies and the State of California Air Board. I would tell you that the reaction handling is going as expected or even better on that front. You know, at this point, the outlays are running somewhat ahead of our expectations because we've taken additional steps to decrease the impacted area and accelerated some of those steps on our leachate treatment activities. We continue to believe and expect these efforts and that others that we're pursuing will and are resulting in decreasing outlays given the progress that we've made. You know, that's really the reaction front.

Speaker #4: So I would tell you that the reaction handling is , is , is going as expected or even better on that front , you know , at this point , the outlays are running somewhat ahead of our expectations because we've taken additional steps to decrease the impacted area and accelerated some of those steps on our treatment activities .

Speaker #4: We continue to believe and expect these efforts . And that others that were pursuing will , will , and are resulting in decreasing outlays given the progress that we've made .

Speaker #4: So , you know , that's really the reaction front . And then you have the the sort of the whole separately regulatory compliance and , and litigation that comes along with this type of event .

Ron Mittelstaedt: You have the sort of the whole separately regulatory compliance and litigation that comes along with this type of an event. Of course, you know, we're not gonna comment on litigation because we are in a public forum. I'll just tell you that that's probably expected as you would expect in something like this. You know, that's really the update on where we're at.

Speaker #4: And of course , you know , we're not going to comment on litigation because we are in a public forum . But I just tell you that that's probably expected , as you would expect in something like this .

Speaker #4: So , you know , that's really the update on where we're at .

Speaker #8: And that's helpful . Ron . And just in terms of Guideposts around the outlays for for the this year versus what you can expect maybe next year .

Konark Gupta: That's helpful, Ron. Just in terms of guideposts around the outlays for the Chiquita, this year versus what you can expect maybe next year.

Speaker #4: Yeah . Well , you know , we're we're not yet prepared to outline that what we will obviously do . So in February when we give our full guidance .

Ron Mittelstaedt: Yeah. Well, you know, we're not yet prepared to outline that. Well, we will obviously do so in February when we give our full guidance. What I can tell you is that, as we said, we're somewhat ahead at this point right now this year. We don't necessarily view that negatively. We have no reason to expect, as we sit here today, that the total outlay that we have outlined when we originally took an impairment and a charge when we closed the site for post closure has any material change to the totals.

Speaker #4: But what I can tell you is that as we said , we're somewhat ahead at this point right now . This year , we don't necessarily view that negatively .

Speaker #4: We have no reason to expect , as we sit here today , that the total outlay that we have outlined when we originally took an impairment and a charge when we closed the site for Post-closure , has any material change to the totals , okay .

Speaker #8: And that's really helpful . Thanks . And just to wrap up a quick on the volume side of things , I think heading into the third quarter , the expectation was volumes could be a little bit worse than what you guys had seen in the first half .

Konark Gupta: Okay. That's really helpful. Thanks. Just to wrap up quick on the volume side of things. I think, you know, heading into Q3, the expectation was volumes to be a little bit worse than what you guys have seen in the first half. Just trying to understand, like, you know, if you can parse out some of the key underlying drivers in the volumes here with respect to, you know, macro, the Chiquita, obviously overlap, because you shut down the landfill in Q4 last year. Anything else in the volume that you can call out for Q3 and expectations Q4.

Speaker #8: So, just trying to understand if you can parse out some of the key underlying drivers in the volumes here with respect to macro. They obviously overlap because you shut down the landfill in Q4 last year. Also, is there anything else in the volume that you can call out for Q3 and expectation for Q4?

Speaker #5: Sure . So to your point , coming into Q3 , we'd seen some incremental weakness at the end of Q2 and our expectation was that perhaps there was really no seasonal ramp , and we did see a bit of a seasonal ramp , but we would describe it as muted .

Mary Anne Whitney: Sure. To your point, coming into Q3, we'd seen some incremental weakness at the end of Q2, and our expectation was that perhaps there was really no seasonal ramp, and we did see a bit of a seasonal ramp, but we would describe it as muted. You know, I think it was up about, you know, 1.5% sequentially, which is less than half of what you would typically expect to see. You know, some muted improvements. As I mentioned in the prepared remarks, special waste was up, you know, about 10%. I'd always hesitate to generalize from something that's event-driven and pretty lumpy since last year, special waste was down 10% in the quarter.

Speaker #5: You know , I think it was up about 1.5% sequentially , which is less than half of what you would typically expect to see .

Speaker #5: So , so , you know , some muted improvements , as I mentioned in the prepared remarks , special waste was up about 10% .

Speaker #5: I'd always hesitate to generalize from something that's event driven and pretty lumpy , since last year , special waste was down 10% in the quarter , but it was encouraging to see less negative trends again , as I mentioned in the remarks in C and D , so a little better than it had been in prior quarters .

Mary Anne Whitney: It was encouraging to see less negative trends, again, as I mentioned in the remarks in C&D, so a little better than it had been in prior quarters. Again, I wouldn't generalize from this because also as I'd mentioned, some of it is just timing. You know, we had expectations about what the back half of the year could look like, and if some of it occurs in Q3, that means you shouldn't assume it happens again in Q4, again, given the event-driven nature of the business. Encouraging to see that things aren't incrementally worse. You know, arguably, this is our eighth quarter or even more of just kinds of flattish activity levels, and so you're not seeing the creation of new volumes.

Speaker #5: Again , I wouldn't generalize from this because also , as I'd mentioned , some of it is just timing , and we had expectations about what the back half of the year could look like .

Speaker #5: And if some of it occurs in Q3 , that means you shouldn't assume it happens again in Q4 . Again , given the event driven nature of the business .

Speaker #5: But encouraging to see that things aren't incrementally worse . You know , arguably , this is our eighth quarter or even more of just kind of flattish activity levels .

Speaker #5: And so you're not seeing the creation of new volumes.

Speaker #8: Understood . Thanks so much for the call . Appreciate it .

Konark Gupta: Understood. Thanks so much for the color. Appreciate it.

Speaker #3: Our next question comes from Chris Murray from ATB Capital Markets . Please go ahead with your question .

Operator: Our next question comes from Chris Murray from ATB Capital Markets. Please go ahead with your question.

Speaker #9: Yeah . Thanks . Good morning . Maybe just maybe , just , you know , thinking volumes as we go into next year and just , you know , if you think about the we're going to be rolling off Chiquita , which has been , you know , a pretty big headwind .

Chris Murray: Yeah, thanks, folks. Good morning. Maybe just, you know, thinking about volumes as we go into next year. Just, you know, if you think about that we're gonna be rolling off Chiquita, which has been, you know, a pretty big headwind. You know, if I think about the, kind of the revenue guide, kind of mid-single digits, with kinda call it 3% type inflation numbers, can you just really give us an idea how you're thinking about getting to that kinda mid-single-digit number? Does that include any sort of expectation for any volume growth, kind of an MSW year-over-year?

Speaker #9: You know , if I think about the kind of the revenue guide kind of mid-single digits with kind of call it three percentage type inflation numbers , can you just really give us an idea how you're thinking about getting to that kind of , kind of mid-single digit number and does that include any sort of expectation for any volume growth , kind of in MSW year over year ?

Speaker #5: Sure . Chris . So of course , we're not giving guidance . And these were broad but , you know , at a very high level , a way to think about it since , as you know , we think in terms of price led organic growth .

Mary Anne Whitney: Sure, Chris. Of course, we're not giving guidance, and these were broad strokes, but, you know, at a very high level, a way to think about it, since as you know, we think in terms of price led organic growth, and as I mentioned earlier, you know, we think in terms of how much price we need and whether or not we're seeing incremental headwinds from inflation or we're seeing any easing. Given the fact that as we've talked about the underlying margin expansion we've enjoyed because of the self-help measures and the fact that trends aren't getting worse based on what we're seeing right now, one could envision that the pieces would have price that's not as positive as it was in the current environment, and there might be volumes that are not as negative.

Speaker #5: And as I mentioned earlier, we think in terms of how much price we need and whether or not we're seeing incremental headwinds from inflation, or we're seeing any easing.

Speaker #5: And given the fact that , as we've talked about the underlying margin expansion , we've enjoyed because of the self-help measures and the fact that that trends aren't getting worse based on what we're seeing right now .

Speaker #5: One could envision that the pieces would have price that's not as as positive as it was in the current environment . And there might be volumes that are not as negative .

Speaker #5: And the net impact of those two would get you to be approaching the kind of numbers we're talking about. And then you layer on the M&A with some offsets.

Mary Anne Whitney: The net impact of those two would get you to be approaching the kinds of numbers we're talking about. You layer on the M&A with some offsets. I'd say that's a way to think about the building blocks. Of course, we'll have better information and insights in February when we actually give our guidance.

Speaker #5: And so I'd say that's a way to think about the building blocks . And of course , we'll have better information and insights in February when we actually give our guidance .

Speaker #5: .

Speaker #4: And Chris , I would tell you that , look , we have said that our cost this year have been running . Of course , they were higher at the beginning of the year , coming down throughout the year .

Ron Mittelstaedt: Chris, I would tell you that, look, we have said that our costs this year, have been running. Of course, they were higher at the beginning of the year, coming down throughout the year. You know, we point to labor because that's the largest cost item. As we exit the year, we're approaching going below 4% in labor. It was 4.1% in Q3. Our other costs are running just below that. You know, We believe that next year that that labor number runs closer to the mid-3s, maybe 3.5. Again, we've talked about maintaining the type of spread we've had this year in price. Assuming that is what continues in the cost, I think you can get yourself pretty close.

Speaker #4: You know , we point to labor because that's the largest cost item as we exit the year , we're approaching , going below 4% in labor , it was 4.1% in Q3 .

Speaker #4: And and our other costs are running just below that . So , you know , we are we believe that next year that that labor number runs closer to the mid threes , maybe three and a half .

Speaker #4: So again , we've talked about maintaining the type of spread . We've had this year in price . So assuming that is what continues in the cost I think you can get yourself pretty close .

Speaker #9: Yeah . No that's helpful . Thank you . And then maybe taking like the giant kind of step and into 27 assuming that you kind of get the normal kind of kind of inflection , you know , at least the , the thinking has been as we've been bringing in these RNG investments .

Chris Murray: Yeah. No, that's helpful. Thank you. Maybe taking, like, the giant kind of step into '27. Assuming that you kind of get the normal kind of inflection, you know, at least the thinking has been as we've been bringing in these RNG investments. Thank you for the clarification. It's probably going to be a Q4 '26 thing, but as we get into '27. I guess the expectation was always there'd be about $1 of EBITDA for every dollar you sort of put into the program. If you just have any updates and any thoughts around how we should maybe frame that as we think about maybe those years, that would be helpful.

Speaker #9: And thank you for the clarification . It's probably going to be a Q4 26 thing , but but as we get into 27 , it was I guess , the expectation was always there'd be about a dollar of EBITDA for every dollar .

Speaker #9: You sort of put into the program. But if you just have any updates and any thoughts around how we should maybe frame that as we think about maybe those out years, that would be helpful.

Speaker #5: Sure . So , Chris , we've talked over the past couple of years about the fact that that dollar of investment had grown and and the fact that , you know , we we'd seen the cost creep and the delays on these projects and , you know , that that has continued and it's contributed to the expectations that those don't come online until late 26 , early 27 .

Mary Anne Whitney: Sure. Chris, we've talked over the past couple of years about the fact that dollar of investment had grown, and the fact that, you know, we'd seen the cost creep and the delays on these projects and, you know, that has continued and it's contributed to the expectations that those don't come online till late 2026 or early 2027. The other major factor, you know, driving that equation is what RIN values are. Of course, that one for one was in an environment of, you know, $2.50 to $3 RINs and, you know, if we're sitting at $2.25 and have been below that certainly alters our expectations. You could see the one-to-one moving closer to two-to-one depending on what those ultimate values are.

Speaker #5: The other major factor driving that equation is what Rin values are . And of course , that one for one was in an environment of , you know , 250 to $3 Rins .

Speaker #5: And , you know , if we're sitting at 225 and have been below that , that's certainly alters our expectations . And , and you could see the 1 to 1 moving closer to 2 to 1 , depending on what those ultimate values are .

Speaker #9: Okay , I'll leave it there . Thank you .

Kevin Chiang: Okay. I'll leave it there. Thank you.

Speaker #3: Our next question comes from Kevin Chang from CIBC. Please go ahead with your question.

Operator: Our next question comes from Kevin Chiang from CIBC. Please go ahead with your question.

Speaker #10: Thanks . Thanks and good morning , everybody . First of all , congratulations on on the progress you're making on on some of these safety metrics .

Kevin Chiang: Thanks. Thanks, and good morning, everybody. First of all, congratulations on the progress you're making on some of these safety metrics. I guess as you think about 2026, I'm wondering if you start seeing the benefits of less of a headwind, I guess, from the risk management inflation you're seeing in the 2025 results. I did notice Canada actually had at least you called out in Q3, you know, risk management was actually a tailwind to your margin. Just wondering what's happening in Canada from a risk management cost perspective versus what you're seeing in the US.

Speaker #10: I guess as we think about 2026 , I'm wondering if you start seeing the benefits of of of less of a headwind , I guess from , from the risk management inflation you're seeing in the 2025 results .

Speaker #10: And then I did notice Canada actually had a at least we called out in Q3 , you know , risk management was actually a tailwind to your margins .

Speaker #10: Just just wondering what's happening in Canada from a risk management cost perspective versus what you're seeing in the US ?

Speaker #5: I think that was specifically related to a comeback on workers' comp. Episodically, we get a credit, and so that can cause some lumpiness quarter to quarter.

Mary Anne Whitney: I think that was specifically related to a comeback on workers' comp. Episodically, we get a credit, and so that can cause some lumpiness quarter to quarter. All of our regions are seeing improvement in safety. To your question about when we see the benefit of risk management costs, you know, again, given the nature of the lagging nature and the fact that it's, you know, statistically driven or actuarially driven and, you know, claim development periods impact or influence how long it takes to see, you know, we'd always be cautious about putting too fine a point on it. Even in our overall program costs, I'm optimistic that there's some benefits in 26 versus 25.

Speaker #5: All of our regions are seeing improvement in safety . And to your question about when we see the benefit of risk management costs , you know , again , given the nature of the lagging nature and the fact that it's , you know , statistically driven or actually driven and , and claim development periods , impact or influence , how long it takes to see , you know , we'd always be cautious about putting too fine a point on it .

Speaker #5: But even in our overall program costs , I'm optimistic that there's some benefits in 26 versus 25 . I think the key thing to take away , Kevin , is that , you know , we had talked about 100 basis points of margin expansion , and we're driving the kind of results you've seen in spite of the fact that it's not just that we haven't gotten the risk benefit , but it continues to be a headwind of 20 to 30 basis points in the quarter .

Mary Anne Whitney: I think the key thing to take away, Kevin, is that, you know, we had talked about 100 basis points of margin expansion, and we're driving the kind of results you've seen in spite of the fact that not just that we haven't gotten the risk benefit, but it continues to be a headwind of 20 to 30 basis points in the quarter. It gives you an idea of what unlocking it could do as we look ahead.

Speaker #5: So it gives you an idea of what unlocking it could do . As we look ahead .

Speaker #10: That's that's helpful . Maybe just on your Canada R3 60 opportunities . If I recall , you had some idled assets when you made the acquisition , I guess from secure .

Kevin Chiang: That's helpful. Maybe just on your Canada R360 opportunities. If I recall, you had some idled assets when you made the acquisition, I guess from SECURE. Just given where energy prices are, just how do you view that optionality, I guess? Is that still something that you'd look to invest in to bring some of these facilities online, or do you need a higher energy price to make that work?

Speaker #10: Just give more energy prices are just just how do you view that that that that optionality I guess is that still something that you'd look to invest in to , to bring some of these facilities online , or do you need a higher energy price to , to make that work ?

Speaker #4: Yeah . Good recollection on that . Kevin . In fact , there was there were six idle assets when we closed the transaction , you know , two , two and a quarter years ago or two and a half years ago now we have in the course of 2025 , invested in and opened two of those six .

Ron Mittelstaedt: Yeah. A good recollection on that, Kevin. In fact, there were 6 idle assets when we closed the transaction, you know, two and a quarter years ago, or two and a half years ago now. We have, in the course of 2025, invested in and opened 2 of those 6. That is actually something that helped us in Q3 at 1 of those facilities. Again, these are smaller facilities and smaller contributions, but we certainly were positive to volumes and our performance in Q3 and will be in Q4. We're gonna assess each of the remaining 4 over, we reassess all the time. You know, it isn't as much in Canada because it's a production-based business.

Speaker #4: And and that is actually something that that helped us in Q3 at one of those facilities . Again , these are smaller facilities and smaller contributions , but they certainly were positive to volumes .

Speaker #4: And our our performance in Q3 and will be in Q4 , we're going to assess each of the remaining four over . We reassess all the time .

Speaker #4: You know , it isn't as much in Canada because it's a production based business . It isn't as much the price of crude , although that is influential .

Kevin Chiang: Mm-hmm.

Ron Mittelstaedt: It isn't as much the price of crude, although that is influential, no question. It's where there is new drilling activity and its proximity to facilities that you might have shuttered. As activity moves amongst formations from time to time, and it moves much slower in Canada 'cause they have much longer life wells, that will really affect when we open those additional facilities.

Speaker #4: No question. It's where there is new drilling activity and its proximity to facilities that you might have shuttered. As activity moves amongst formations from time to time — and it moves much slower in Canada because they have much longer life wells — that will really affect when we open those additional facilities.

Speaker #10: That's that's super helpful . Maybe if I can just fit one last one in here , just just any update on the New York commercial zones ?

Kevin Chiang: That's super helpful. Maybe if I can just fit one last one in here. Just any update on the New York commercial zones. It looks like they're gonna open up the, I guess, the 2 Bronx regions, which I think you have, you know, you have a, I guess a permit in those markets as well. Just how is that going and your experience in Queens, you know, I guess as that test run has come to an end here?

Speaker #10: It looks like they're going to open up the I guess the two Bronx regions , which I think you have , you know , you have I guess the permit in those markets as well .

Speaker #10: Just just how's that going ? And your experience in Queens , I guess , as that test run has , has come to an end here .

Speaker #4: Yeah , you are right . In fact , they have opened to additional zones and we have permits in both . Kevin , to answer your question , they open those October 1st .

Ron Mittelstaedt: Yeah. You are right. In fact, they have opened 2 additional zones, and we have permits in both, Kevin, to answer your question. They opened those 1 October, we're, you know, 2.5 weeks into it. It's going fairly well. Again, I would say about as expected. We didn't mention this in our commentary, in the Q4, we will be closing on the largest remaining transfer station in the Queens market that we have actually had under definitive agreement since back in April and May. There's a, you know, a complex regulatory process to get through in New York, we have gotten through that process and gotten approval to close on that transfer station.

Speaker #4: So we're you know , two and a half weeks into it , it's going fairly well . And again , I would say about as expected , we didn't mention this in our commentary .

Speaker #4: But in the fourth quarter, we will be closing the largest transaction on the largest remaining transfer station in the Queens market. We have actually had this under definitive agreement since back in April and May.

Speaker #4: And there's a , you know , a complex regulatory process to get through in New York . And we have gotten through that process and gotten approval to close on that transfer station .

Speaker #4: And that really gives us one more leg in this in this jigsaw puzzle of how the franchise business comes together in New York City .

Ron Mittelstaedt: That really gives us one more leg in this jigsaw puzzle of how the franchise business comes together in New York City. We're looking forward. We will have that open here. Well, we'll have it under ownership here in Q4. We're making good progress. It's, you know, a scramble when they open these zones. We are very, very well positioned for that with the magnitude and size of our sales force and our operating footprint there. I'd say that continues to play out about as expected, and we look forward to them rolling out the remaining zones over 2026 and 2027.

Speaker #4: So we're we're looking forward . We will have that open here . Well , we will have it under ownership here in the fourth quarter .

Speaker #4: So we're making good progress . It's , you know , it's a scramble when they open these zones . But we are very , very well positioned for that with the magnitude and size of our sales force and our operating footprint there .

Speaker #4: So I would say that continues to play out about as expected. We look forward to them rolling out the remaining zones over 2026 and 2027.

Speaker #10: Perfect. I appreciate you taking my questions. Thank you very much.

Kevin Chiang: Perfect. I appreciate you taking my questions. Thank you very much.

Speaker #3: Our next question comes from Jim Shum from TD Cowen . Please go ahead with your question .

Operator: Our next question comes from James Schumm from TD Cowen. Please go ahead with your question.

Speaker #11: Hey , good morning . Nice quarter . All my questions have been answered . I've just two quick ones for you though . Are you seeing any issues obtaining new trucks ?

James Schumm: Hey, good morning. Nice quarter. All my questions have been answered. I have just two quick ones for you, though. Are you seeing any issues obtaining new trucks, and do you think there will be any tariff impact next year? I know there was pretty much no impact this year.

Speaker #11: And do you think there will be any tariff impact next year? I know there was pretty much no impact this year.

Speaker #4: Yeah , Jim , I mean , first off , I would tell you that we are really not seeing and it's a good question because up until I would tell you probably about mid this year , there was still some supply chain delay , but that has really eased .

Ron Mittelstaedt: Yeah, Jim, I mean, first off, I would tell you that we are really not seeing. It's a good question because up until, I would tell you probably about mid this year, there was still some supply chain delay, but that has really eased. In fact, we are in the market currently buying additional fleet that we're pulling into 25 because of availability of it and our desire to not only obtain it, but to take advantage of bonus depreciation with the change in law. No, we're really not. I wouldn't wanna use that as a reason we couldn't deliver on, you know, getting all of our vehicles.

Speaker #4: And in fact , we are in the market currently buying additional fleet that we're pulling into 25 because of availability of it . And our desire to not only obtain it , but to take advantage of bonus depreciation with the with the change in change in law .

Speaker #4: So no , we're really not . So I wouldn't want to use that as , as a reason . We we couldn't deliver on , you know , getting all of our vehicles as far as tariffs .

Ron Mittelstaedt: As far as tariffs, you know, we are hearing from manufacturers that there's probably somewhere in the neighborhood of a $3,000 up to about a $7,500 per truck impact because it affects different components of both the chassis and the bodies separately. I would tell you that that is, you know, relatively de minimis in the total scheme of things. There is some, you know, very small impact at this point in time in 2026 going forward from the manufacturers.

Speaker #4: You know we are we are we are hearing from manufacturers that there's probably somewhere in the neighborhood of a three up to a 3000 , up to about a 7500 per truck impact because it affects different components of both the chassis and the bodies separately .

Speaker #4: So I would tell you that that is , you know , relatively de minimis in the total scheme of things . But there is some very small impact at this point in time .

Speaker #4: In 26 , going forward from the manufacturers .

Speaker #11: Okay , great . Thanks . And then , you know , you guys talked quite a bit about volume and just maybe one more on that from a from a volume standpoint next year .

James Schumm: Okay, great. Thanks. You know, you guys talked quite a bit about volume. Just maybe one more on that. From a, from a volume standpoint next year, are there any major contracts that expire that you're likely to shed for next year? I know that there's always gonna be some, but I mean, like, large sort of needle movers, whether it be from Progressive or any other contracts.

Speaker #11: Are there any major contracts that expire that you're likely to shed for next year ? Now , I know that there's always going to be some .

Speaker #11: But I mean, like large sort of needle movers, whether it be from Progressive or any other contracts.

Speaker #5: Write , you know , understanding that there's always ins and outs . No , there's no significant chunky contract . And and in fact , in Q4 , the chunkier one that's been impacting this year about 20 basis points that actually expires your anniversaries .

Mary Anne Whitney: Right. You know, understanding that there's always ins and outs. No, there's no significant chunky, you know, contract. In fact, in Q4, you know, the chunkier one that's been impacting, this year about 20 basis points, that actually expires your anniversaries, and so it eases that shedding a little bit.

Speaker #5: And so it eases that shedding a little bit .

Speaker #11: Okay . Great . Thank you very much .

James Schumm: Okay, great. Thank you very much.

Mary Anne Whitney: Sure.

Speaker #3: Our next question comes from Toby Selmer from Truist . Please go ahead with your question .

Operator: Our next question comes from Toby Sommer from Truist. Please go ahead with your question.

Speaker #12: Thanks . With commodity prices in Rins recycling kind of being a headwind here for a period of time , does this influence and affect at all the way you think about the mix and exposure that you want to have within the portfolio and income statement in these buckets ?

Toby Sommer: Thanks. With commodity prices, in RINs, recycling kind of being a headwind here for a period of time, does this influence and affect at all the way you think about the mix and exposure that you wanna have within the portfolio and income statement in these buckets? You know, how much higher or lower do you think your exposure might be in three or five years?

Speaker #12: And you know how much higher or lower do you think your exposure might be in 3 or 5 years?

Speaker #5: Toby , we think in terms of providing the service to our customers . And so it's really a function of the mix of markets where as you can appreciate , on the West Coast , where we've always had a , you know , a high amount of diversion and therefore recycling , and that's a great model for for that business .

Mary Anne Whitney: Toby, we think in terms of providing the service to our customers. It's really a function of the mix of markets, whereas you can appreciate on the West Coast, where we've always had a, you know, a high amount of diversion and therefore recycling. That's a great model for that business. Then, off of the West Coast, in places where, you know, really we've always taken kind of a slow-moving approach to get critical mass and then build out our own recycling facilities. Again, it's all based on, you know, meeting the customer's needs, and then we think about de-risking it to the extent we can. That's why you've seen us build our own recycling facilities in certain markets, and it's really coincided with the incremental technology in these facilities. That's made it a better business.

Speaker #5: And then off of the West Coast, in places where really we've always taken a kind of a slow-moving approach to get critical mass and then build out our own recycling facilities.

Speaker #5: Again , it's all based on meeting the customer's needs . And then we think about de-risking it to the extent we can . That's why you've seen us build our own recycling facilities in certain markets , and it's really coincided with the incremental technology in these facilities .

Speaker #5: And so that's made it a better business. And, you know, partnering with a nationwide broker to get better pricing through volumes.

Mary Anne Whitney: You know, partnering with a nationwide broker to get better pricing through volume. We've approached it as how do we mitigate the overall impact, make it a better underlying business, and then communicate to you all what the sensitivity is with movement in commodity values. 'Cause we've always maintained, particularly given the fact that the recycled commodities running through our facilities come off of our own trucks, it really has to start with pricing it appropriately at the street. That's what we focus on.

Speaker #5: So we we've approached it as how do we mitigate the overall impacts , make it a better underlying business . And then communicate to you all what the sensitivity is with movement in commodity values , because we've always maintained , particularly given the fact that the recycled commodities running through our facilities come off of our own trucks , it really has to start with pricing .

Speaker #5: It appropriately at the street . And so that's what we focus on .

Speaker #4: And the last thing I'd say , Toby , is , with regard to that is if you think about our , you know , I'm going to use this word growth algorithm , where we have predominantly price led organic growth .

Ron Mittelstaedt: The last thing I'd say, Toby, is with regard to that is, if you think about our, you know, I'm gonna use this word, growth algorithm, where we have predominantly price-led organic growth. It, you know, obviously if that's the case, your percentage of commodities will naturally drop over time mathematically. Unless your M&A is materially outpacing in a year, your price-led organic growth, and it has been running about the same or maybe a little under. I think, you know, over time it is much more likely that the percentage of things that are linked to a commodity that has some market volatility continues to drop as a percentage of revenue in generalities.

Speaker #4: It you know , obviously , if that's the case , your percentage of commodities is will naturally drop over time . Mathematically . And unless you're M&A is materially outpacing in a year , your price led organic growth and it has been running about the same , or maybe a little under .

Speaker #4: So I think over time it is much more likely that the percentage of the things that are linked to a commodity that has some market volatility continues to drop as a percentage of revenue in generalities.

Speaker #12: Thank you . And I wanted to ask a question about the great labor retention and and the cascading positive financial impacts on the income statement .

Toby Sommer: Thank you. Now, I wanted to ask a question about the great labor retention and the cascading positive financial impacts on the income statement. How...

Toby Sommer: Thank you. Now, I wanted to ask a question about the great labor retention and the cascading positive financial impacts on the income statement. How...Much of a margin impact and sort of delta is there between the current trend, which is phenomenal, and what you might consider to be normal, because should the labor market ever kind of change here and start to improve, there may be a little bit of giveback for the industry and the company.

Speaker #12: Oh , much of a margin impact in sort of delta . Is there between the current trend , which is phenomenal , and what you might consider to be normal , because should the labor market ever kind of change here and start to improve , there may be a little bit of give back for for the industry and the company .

William Grippin: Much of a margin impact and sort of delta is there between the current trend, which is phenomenal, and what you might consider to be normal, because should the labor market ever kind of change here and start to improve, there may be a little bit of giveback for the industry and the company.

Speaker #4: Yeah . Well , I , I would characterize it in this way . We have originally when we went down this path , we said , hey , there's about a 100 basis points of margin expansion that can be unlocked over a 2 to 3 year period as we achieve our turnover reduction goals .

Ron Mittelstaedt: Yeah. Well, I would characterize it in this way. We have, originally, when we went down this path, we said, hey, there's about 100 basis points of margin expansion that can be unlocked over a 2 to 3-year period as we achieve our turnover reduction goals. We said that that doesn't show up in just one line item. It sort of shows up in 7 or 8 at, you know, 10 to 15 basis points per line item. That has happened. We are about two-thirds through, I'd call it 65 to 70 basis points of that unlock has been achieved. Now, here is the thing.

Speaker #4: And we said that that doesn't show up in just one line item . It sort of shows up in 7 or 8 at , you know , 10 to 15 basis points per line item .

Speaker #4: And that has happened . We are about two thirds through . I'd call it 65 to 70 basis points of that unlock has been achieved .

Speaker #4: Now here is the thing . We've actually achieved 130 basis points because we've overcome the margin headwinds of things that have affected against us , such as drops in commodities , Rins , as we've talked about and and increases in risk or from from prior period severity .

Ron Mittelstaedt: We've actually achieved 130 basis points because we've overcome the margin headwinds of things that have affected against us, such as drops in commodities, RINs, as we've talked about, and increases in risk or from prior period severity. We've still got another, you know, third to go to get that at 100, but that would actually put it at closer to about 160 to 170 is what we would've achieved through that. You know, we believe you'll see the vast majority of that finish out over the course of 2026. You know, if there is, to use your word, additional giveback because there was some labor softening, you know, that would be determined.

Speaker #4: So we've still got another , you know , third to go to get that at 100 . But that would actually put it at closer to about 160 , to 170 is what we would have achieved through that .

Speaker #4: So we believe you'll you'll see the vast majority of that finish out over the course of 26 . And then , you know , if there is to use your word , additional giveback , because there was some labor softening , you know , that would be determined .

Speaker #4: But but I will tell you that , look , you you're always in the market to hire the best quality people . And even in the , even in a time of labor softening , best quality people in this , in this economy have opportunities .

Ron Mittelstaedt: I will tell you that, look, you're always in the market to hire the best quality people, and even in a time of labor softening, best quality people in this, in this economy have opportunities. I wouldn't think of, you know, not flexing downward. I would just think of it as being more stabilized.

Speaker #4: So I wouldn't think of , you know , that that flexing downward . I would just think of it as being more stabilized .

Speaker #12: Thank you very much .

William Grippin: Thank you very much.

Speaker #3: Our next question comes from Sabahat Khan from RBC Capital Markets . Please go ahead with your question .

Operator: Our next question comes from Sabahat Khan from RBC Capital Markets. Please go ahead with your question.

Speaker #13: Great . Thanks and good morning . Just a quick clarification on the margin and maybe a bit more of a detailed one . If we cut it right .

Sabahat Khan: Great. Thanks, and good morning. Just a quick clarification on the margin and maybe a bit more of a detailed one. If we caught it right, I think you were saying about 50 to 80 basis points of underlying margin improvement offsetting about 30 to 40 basis points of headwinds. One, did I catch that correct? Secondly, is this just more kind of price cost spread and benefits of the employee sort of safety and all the retention-related benefits, or are there kind of other benefits that you expect? Maybe even if you think about two, three years, kind of where are the, some of the margin levers that we should look at? Thanks.

Speaker #13: I think you were saying about 50 to 80 beats of underlying margin improvement offsetting about 30 to 40 beats of headwinds . One .

Speaker #13: Did I catch that ? Correct . And secondly , is this just more kind of price cost spread and benefits of the employee sort of safety and all the retention related benefits ?

Speaker #13: Or are there other benefits that you expect ? Maybe even if you think about two , three years kind of where are the some of the margin levers that we should look at ?

Speaker #13: Thanks .

Speaker #5: So just to make sure we're all saying the same thing , we think of normalized margin expansion in the 20 to 40 basis point range .

Mary Anne Whitney: Just to make sure we're all saying the same thing, we think of normalized margin expansion in the 20 to 40 basis point range. However you net to that number is the right way to think about, you know, being driven by that underlying solid waste margin expansion. You've seen us deliver underlying solid waste margin expansion for the past several quarters and acknowledging that there are headwinds from commodities, which we said it's, you know, call it 20-ish, 25 basis points, and that acquisitions are dilutive and would be expected to continue to be to the extent anyone's layering more deals, of course. We wouldn't encourage that, but just need to be mindful of those dynamics. I think we're all saying the same thing, but that would just be the clarification there.

Speaker #5: So however you get to that number is the right way to think about , you're being driven by that underlying solid waste margin expansion .

Speaker #5: You've seen us deliver underlying solid waste margin expansion for the past several quarters . And acknowledging that there are headwinds from commodities , which we said it's , you know , call it 20 ish , 25 basis points .

Speaker #5: And that acquisitions are dilutive . And would it be expected to continue to be to the extent anyone's layering more deals ? Of course , we would encourage that .

Speaker #5: But just need to be mindful of those dynamics . So I think we're all saying the same thing . But that would just be the clarification .

Speaker #5: There . And again , in terms of what's driving the underlying margin expansion , again , we go into any year thinking of that price .

Mary Anne Whitney: Again, in terms of what's driving the underlying margin expansion, again, we go into any year thinking of that price cost spread and the opportunity to do better than that because of these self-help measures, whether it's on pricing retention or employee retention and the cost benefits associated with that, including those lagging benefits from RINs. Any of the granularity on the drivers, we'll certainly look forward to talking about in February when we give our guidance. We appreciate the opportunity to communicate at a very high level, broad strokes, how we're thinking about next year.

Speaker #5: Cost spread and the opportunity to do better than that because of these self-help measures , whether it's on pricing , retention or employee retention and the cost benefits associated with that , including those lagging benefits from risk .

Speaker #5: But any of the granularity on the drivers will certainly look forward to talking about in February , when we give our guidance , we appreciate the opportunity to communicate at a very high level , broad strokes , how we're thinking about next year .

Speaker #13: Okay , great . And then just within that 7% growth number in the E&P , I think you mentioned there's a small facility .

Sabahat Khan: Okay, great. Just within that 7% growth number in the E&P, I think you mentioned there's a small facility that added as well. Is there any way to quantify what the sort of an annual or run rate benefit from a facility like that might be?

Speaker #13: Facility that added as well . Is there any way to quantify what the sort of an annual run rate benefit from a facility like that might be ?

Speaker #4: Oh , the annual the annual contribution from a facility like that is probably in the 3 million revenue range . And , you know , one and a half to 2 million EBITDA range .

Ron Mittelstaedt: Oh, the annual contribution from a facility like that is probably in the $3 million revenue range and, you know, $1.5 to 2 million EBITDA range.

Speaker #13: Okay , great . And then lastly , I think there's a comment in within this quarter . The result is an amount related to a landfill .

Sabahat Khan: Okay, great. Lastly, I think there was a comment in, within this quarter, the result, there is an amount related to a landfill. Presumably, it's something different than the Chiquita landfill. You know, should we assume that this was just sort of like a one-off? Is there any sort of bookends you'd wanna put on some amount like that, or should we just see this as a one-off remediation type cost that was incurred in the quarter? Thank you.

Speaker #13: Presumably it's something different than the landfill . But should we assume that this was just sort of like a one off ? Is there any sort of bookends you'd want to put on some amount like that , or should we just see this as a one off remediation type cost that was incurred in the quarter ?

Speaker #13: Thank you .

Speaker #5: Yes , thanks . Nothing to do with Chiquita . It's a one off . I mean , it's just a timing difference in commissioning and disposal .

Mary Anne Whitney: Yes, thanks. Nothing to do with Chiquita. It's a one-off, as you said. I mean, it's just a timing difference in commissioning a disposal well and some incremental costs in the meantime.

Speaker #5: Well , and some incremental costs in the meantime .

Speaker #13: Great. Thanks very much for that.

Sabahat Khan: Great. Thanks very much for that.

Mary Anne Whitney: Sure.

Speaker #3: Our next question comes from William Griffin from Barclays . Please go ahead with your question .

Operator: Our next question comes from William Grippin from Barclays. Please go ahead with your question.

Speaker #14: Great . Thank you . Good morning . Just one quick one for me here on capital allocation . You obviously ramped up share repurchases here in the third quarter .

William Grippin: Great. Thank you. Good morning. Just one quick one for me here on capital allocation. You obviously ramped up share repurchases here in Q3. Just wondering how we should think about maybe the split between spending on acquisitions and buybacks, you know, as we look into 2026, you know, maybe in the context of the M&A pipeline that you kind of see in front of you right now.

Speaker #14: Just wondering how we should think about maybe the split between spending on acquisitions and buybacks as we look into 2026, you know, maybe in the context of the M&A pipeline that you kind of see in front of you right now.

Speaker #5: Sure . Well , you should always think in terms of strategically consistent , appropriately priced M&A is always going to be our highest and best use .

Mary Anne Whitney: Sure. Well, you should always think in terms of, you know, strategically consistent, appropriately priced M&A is always gonna be our highest and best use. We look forward to continuing to grow the business the same way we've historically grown it, you know, concentrating on the types of markets that have really driven our success. Still see a lot of runway. You know, we've talked about the $4.5 to 5 billion in private company revenue that fits that model, and that really, of course, sellers drive the timing of deals, but have talked about the, you know, the pipeline continuing to be robust. You know, Ron talked about the successes we've had this year and the things we're closing in Q4 and looking ahead to next year, you know, more to do.

Speaker #5: We look forward to continuing to grow the business the same way we've historically grown it. You know, concentrating on the types of markets that have really driven our success.

Speaker #5: Still see a lot of runway . You know , we've talked about the four and a half to 5 billion in private company revenue that fits that model .

Speaker #5: And that really of course , sellers drive the timing of deals , but have talked about , you know , the pipeline continuing to be robust .

Speaker #5: And , you know , Ron talked about the successes we've had this year and the things we're closing in Q4 . And looking ahead to next year .

Speaker #5: You know , more to do . So with that , as the backdrop , you know , then the observation is , even with a dividend that continues to grow at double digit percentages annually since its inception , we have tremendous flexibility to also do share repurchases .

Mary Anne Whitney: With that as the backdrop, you know, then the observation is, even with a dividend that continues to grow at double-digit percentages annually since its inception, we have tremendous flexibility to also do share repurchases. You saw that in this recent period when, as we would characterize it, there was an opportunistic environment or said another way, a dislocation that made it compelling from our perspective. That is the way to think about it. The fact that our leverage is 2.75 tells you we have tremendous flexibility to continue really doing all of the above, but always M&A, as I described, will be the first order of business.

Speaker #5: And you saw that in this recent period when , as we would characterize it , there was an opportunistic environment or set another way , a dislocation that made it compelling from our perspective .

Speaker #5: So that is the way to think about it . The fact that we our leverage is 2.75 tells you we have tremendous flexibility to continue really doing all of the above .

Speaker #5: But always M&A , as I described , will be the first order of business .

Speaker #14: Got it. I appreciate the color. Thank you.

Operator: Got it. I appreciate the color. Thank you.

William Grippin: Got it. I appreciate the color. Thank you.

Speaker #4: Thank you .

Ron Mittelstaedt: Thank you.

Speaker #3: Our next question comes from Tammy Zakaria from JPMorgan. Please go ahead with your question.

Operator: Our next question comes from Tami Zakaria from J.P. Morgan. Please go ahead with your question.

Speaker #15: Hi . Good morning . Thank you so much and thanks for all the color . I'll add one quick question here . Any thoughts on how much of a volume headwind we could see ?

Tami Zakaria: Hi. Good morning. Thank you so much, and thanks for all the color. I'll add one quick question here. Any thoughts on how much of a volume headwind we could see next year from some of the contract shedding you're doing willfully? If you could remind us how much of a drag it's expected to be this year, that would be helpful.

Speaker #15: Next year from some of the contracts shedding you're doing willfully ? And if you could remind us how much of a drag it's expected to be , this year , that would be helpful .

Speaker #5: Sure , sure . Tammy , as we've said , when we look at the two seven in in negative volumes , you know , about 70 basis points of that has been this intentional shedding .

Mary Anne Whitney: Sure, sure, Tami. As we've said, when we look at the, you know, the 2.7, in negative volumes, you know, about 70 basis points of that has been this intentional shedding. I mentioned earlier, we know, you know, about a third of that, it'll step down even in Q4 because of one contract re-anniversary. Going forward, it'll really be a function of, you know, how much that continues to decline would be a function of any incremental shedding from acquisitions that we're currently doing or have done in the last year. Given the fact that we've still been busy, there's certainly potential for pieces there, but I wouldn't expect it to get greater than what we've recently seen. I would expect those losses overall to be smaller than they have been in recent periods.

Speaker #5: And I mentioned earlier , we know about about a third of that . It will step down even in Q4 because of one contract .

Speaker #5: We anniversary . And then going forward , it'll really be a function of how much that continues to decline would be a function of any incremental shedding from acquisitions that we're currently doing or have done in the last year .

Speaker #5: And so, given the fact that we've still been busy, there's certainly potential for pieces there. But I wouldn't expect it to get greater than what we've recently seen.

Speaker #5: I would expect those losses overall to be smaller than they have been in recent periods .

Speaker #15: I appreciate the time . Thank you .

Tami Zakaria: I appreciate the time. Thank you.

Speaker #3: Our next question comes from Michael Dummett from National Bank . Please go ahead with your question .

Operator: Our next question comes from Michael Doumet from National Bank. Please go ahead with your question.

Speaker #16: Hey , good morning Ron . Good morning Marianne . I just wanted to ask a question on the regional results . It looks like Canada and the southern US are seeing some pretty solid margin expansion , while the other regions are flat to down year to date .

Michael Doumet: Hey, good morning, Ron. Good morning, Maryann.

Ron Mittelstaedt: Good morning.

Michael Doumet: Just wanted to ask a question on the regional results. It looks like Canada and the Southern US are seeing some pretty solid margin expansion while the other regions are flat to down year to date. I mean, is that reflective of where the recycling business is a little bit larger? Just wondering what is driving the differences in the margins in the regions.

Speaker #16: I mean , is that reflective of where the recycling business is a little bit larger ? Just just wondering what is driving the differences in the margins in the regions .

Speaker #5: So , so typically the biggest drivers would be , yes , it would include recycling to your to your point , are Western region and our eastern region both have large recycling impacts .

Mary Anne Whitney: Typically the biggest drivers would be, yes, it would include recycling. To your point, our Western Region and our Eastern Region both have large recycling impacts. It's also reflects acquisition activity because acquisitions are typically dilutive, you would certainly see that in any of those regions where we've closed deals.

Speaker #5: It's also reflects acquisition activity because acquisitions are typically dilutive . And so you would certainly see that in any of those regions where we've closed deals .

Speaker #4: And the other thing I would say, Michael, is it also reflects that when you ask about the difference between regional margins, it also reflects the general tip fee, landfill tip fee, that is built into the regional differences.

Ron Mittelstaedt: The other thing I would say, Michael, is it also reflects when you ask the difference between regional margins. It also reflects the general tip fee, landfill tip fee as built into the regional differences. Where you are in the Northeast and you're talking $80 to $120 tip fees, or the West, where you're talking $60 to $120 tip fees, you're gonna have suppressed EBITDA margins relative to the central part of the country and the South and Southeast, where you're experiencing $20 to $40 landfill tip fees. Some is just a structural difference.

Speaker #4: So where you are in the northeast and you're talking 80 to $120 tip fees , or the West where you're talking 60 to $120 tip fees , you're going to have suppressed EBITDA margins relative to the central part of the country and the South .

Speaker #4: And Southeast , where you're experiencing 20 to $40 landfill tip fees . So some is just a structural difference .

Speaker #16: Gotcha . Thank you . And then I guess on the if I remember correctly , on the on the Q1 conference call , I remember you indicating that there were a few chunkier deals in the pipeline .

Michael Doumet: Gotcha. Thank you. I guess on the, if I remember correctly, on the Q1 conference call, I remember you indicating that there were a few chunkier deals in the pipeline, and it sounds like you've closed a few of them. I was wondering if there were more ahead, and how they were progressing and just generally on how you view the M&A environment for 2026.

Speaker #16: And it sounds like you've closed a few of them. But I was wondering if there were more ahead and how they were progressing, and just generally on how you view the M&A environment for 2026.

Speaker #4: Yeah . Well , I mean , you are correct . We have closed some of those deals . We closed a very nice sized a large company in South Florida in Q3 .

Ron Mittelstaedt: Well, I mean, yeah, you are correct, Mike. We have closed some of those deals. We closed a very nice-sized, a large company in South Florida in Q3. We have signed and will close in the next few weeks another nice company in Central Florida. Some of those were ones we were referring to. We're also referring to this large transfer station in New York that we have under definitive agreement since May. As I mentioned earlier in a question asked, we will be closing that in this quarter as well. There always, you know, are deals of various sizes that are under, you know, constant discussion and negotiation. I would characterize the M&A environment as continuing to be very strong, very robust.

Speaker #4: We have signed and will close in the next few weeks . Another nice company in Central Florida . So some of those were ones we were referring to .

Speaker #4: We were also referring to this large transfer station in New York that we have under definitive agreement since May . And as I mentioned earlier in a in a question asked , we will be closing that in this quarter as well .

Speaker #4: And there always , you know , are deals of various sizes that are under constant discussion and negotiation . I would characterize the M&A environment as continuing to be very strong , very robust .

Speaker #4: You know , we've we've already done sort of , you know , about two times a quote , normalized year through three quarters and will continue at a strong pace in Q4 .

Ron Mittelstaedt: You know, we've already done sort of, you know, about 2 times a quote, normalized year through 3 quarters, and we'll continue at a strong pace in Q4. This is gonna end up being, you know, more than double average year. And we're not really seeing any material change to that in any way as we head into 2026. I think, you know, if and when and hopefully soon, the economy turns as interest rates continue to pull down throughout 2026 and private owners get a little more lift in their sales, that helps accelerate M&A activity. The catalysts that drive things, you know, they're going the right direction, not the wrong direction.

Speaker #4: So, this is going to end up being a, you know, more than double the average year. And we're not really seeing any material change to that in any way as we head into 2026.

Speaker #4: I think , you know , if a if and when and hopefully soon , the economy turns as interest rates continue to pull down throughout 26 and private owners get a little more lift in their sales , that helps accelerate M&A activity .

Speaker #4: So the catalyst that drives things are not going the you know , they're going the right direction , not the wrong direction .

Speaker #16: That's helpful color . Thanks , Ron .

Mary Anne Whitney: Will do. Thanks, Ron.

Ron Mittelstaedt: Yep.

Speaker #3: Our next question comes from Shlomo Rosenbaum from Stifel . Please go ahead with your question .

Operator: Our next question comes from Shlomo Rosenbaum from Stifel. Please go ahead with your question.

Speaker #17: Hi. Thank you very much, Ron. I just wanted to start asking you if you could flesh out a little bit more your discussion on pricing.

Shlomo Rosenbaum: Hi, thank you very much. Ron, I just wanted to start asking you if you could flesh out a little bit more, your discussion on pricing, you know, that you've gotten from technology, and it sounds like you've been kind of favorably surprised in where you can both price and kind of help you price, I guess, in a very pinpoint way so you're not impacting churn. Where do you think you are in terms of kind of rolling those learnings out across the organization? In your, you know, efforts to kind of explore and analyze it, are you finding additional adjacencies with that technology and analytics that are kind of ongoing, where you're consistently finding some new areas where you feel like you can press additional buttons?

Speaker #17: You know , that you've gotten from technology , and it sounds like you've been kind of favorably surprised in where you can both price and kind of help you price , I guess , in a very pinpoint way .

Speaker #17: So you're not impacting churn . Where do you think you are in terms of kind of rolling those learnings out across the organization and in your , you know , efforts to kind of explore and analyze it ?

Speaker #17: Are you finding any finding additional adjacencies with that technology and analytics that are kind of ongoing , where you're consistently finding some new areas where you feel like you can press additional buttons ?

Speaker #4: Yeah , well , first off , to answer your question , I think we're , you know , only in the second inning of a nine inning game as far as deployment .

Ron Mittelstaedt: Yeah. Well, first off, to answer your question, I think we're, you know, only in the second inning of a nine-inning game as far as deployment, so very, very early in doing so. We have deployed this to about a seventh of our P&Ls so far, and that will grow to about, call it half to 75% throughout 2026. I think you'll continue to see improvement in that 2026 and into 2027, before you really start to see all of the impact. Really look, the ultimate objective, I think, and I don't think we're any different than any of the other large public companies, is how do you achieve your price increase objectives with the least customer churn by type of customer, by geography.

Speaker #4: So very , very early in , in doing so , we have deployed this to about a seventh of our panels so far .

Speaker #4: And that will grow to about call it half to 75% throughout 26 . So I think you'll continue to see improvement in that 26 and into 27 .

Speaker #4: Before you really start to see all of the impact and really look the the , the , the ultimate objective , I think and I don't think we're any different than , than any of the other large public companies .

Speaker #4: Is , is how do you achieve your price increase objectives with the least customer churn by type of customer , by geography . And so , you know , instead of being I'm going to call it more uniform with if everybody's getting a 7% increase in a certain market , you know , does somebody get 1.9 and somebody get 10.4 based on individual customer specifics of sort of an algorithmic stack of what we believe causes customer price acceptance or rejection or negotiation .

Ron Mittelstaedt: You know, instead of being, I'm gonna call it more uniform with if everybody's getting a 7% increase in a certain market, you know, does somebody get 1.9 and somebody get 10.4 based on individual customer specifics of sort of an algorithmic stack of what we believe causes customer price acceptance or rejection or negotiation. You know, I think ultimately this takes pressure off volume trade-off between price and volume. You're gonna begin seeing that in 2026 and continue to see it as we go forward. I think it allows us to achieve with less customer rollback and defection, our price increase objectives.

Speaker #4: And so , you know , I think ultimately this takes pressure off volume , trade off between price and volume . And you're going to you're going to begin seeing that in 26 .

Speaker #4: And continue to see it as we go forward. I think it allows us to achieve with less customer rollback and defection.

Speaker #4: Our price increase objectives . So I think it's a little too early to say what else that means . But if it accomplishes that objective alone , we'd be , you know , extremely satisfied .

Ron Mittelstaedt: I think it's a little too early to say what else that means, but if it accomplishes that objective alone, we'd be, you know, extremely satisfied. The early indication, from, you know, one-seventh of the company's location is very positive. It's a 30% to 40% reduction in churn on similar price increases. That's pretty significant.

Speaker #4: And the early indication from , you , one seventh of the company's locations is very positive . It's a it's a 30 to 40% reduction in churn on similar price increases .

Speaker #4: So that's that's pretty significant .

Speaker #17: Thank you . And then maybe Marianne , Marianne , can you talk a little bit about the puts and takes in the implied margin expansion of 90 basis points year over year for for next quarter , like maybe just give us a little more breakdown on how that should shake out , at least in how you're thinking about it .

Shlomo Rosenbaum: Thank you. Then, maybe for Maryann. Maryann, can you talk a little bit about the puts and takes, in the implied margin expansion of 90 basis points year-over-year for next quarter? Like maybe just give us a little more breakdown on how that should shake out, at least in how you're thinking about it.

Speaker #5: Sure . So the key moving pieces there that change between Q3 and Q4 is that 70 basis point headwind that we talked about from recycled commodities and Rins declines to about 30 basis points .

Mary Anne Whitney: Sure. The key moving pieces there that change between Q3 and Q4 is that 70 basis point headwind that we talked about from recycled commodities and RINs declines to about 30 basis points. That, of course, is the biggest driver of the change period over period.

Speaker #5: And so that that , of course , is is is the biggest driver of of the the change period over period .

Speaker #17: Okay. And then if I'm do you have like a rollover into 2026 for the acquisitions that have been completed to date?

Shlomo Rosenbaum: Okay. Do you have like a rollover into 2026 for the acquisitions that have been completed, to date?

Speaker #5: Yeah , we said it was approaching 1% . That was kind of rounded . I think it's somewhere between 80 and 90 basis points .

Mary Anne Whitney: Yeah, we said it was approaching 1%. That was, you know, kind of rounded. I think it's somewhere between 80 and 90 basis points, something like that.

Speaker #5: Something like that .

Speaker #17: Okay . All right . Thank you very much .

Shlomo Rosenbaum: Okay. All right. Thank you very much.

Speaker #5: Sure .

Mary Anne Whitney: Sure.

Speaker #3: Our next question comes from Toni Kaplan from Morgan Stanley . Please go ahead with your question .

Operator: Our next question comes from Toni Kaplan from Morgan Stanley. Please go ahead with your question.

Speaker #18: Hi. This is Yehuda Silverman on for Toni. Thank you for taking the time. Just a quick question on commodities in the quarter.

Yehuda Silverman: Hi, this is Yehuda Silverman on for Tony. Thank you for taking the time. Just got a quick question on commodities in the quarter. Some of the factors, the headwinds that were factored into the guide, were the results in the quarter worse or better than expected? Looking ahead, what is something that can mark a recovery or stabilization of the commodity prices? Is it more macro or economic activity, the only notable driver, or are there other drivers for potential recovery?

Speaker #18: That was the factors that headwinds that were factored into the guide were the results in the quarter worse or better than expected ? And then looking ahead , what is something that could mark a recovery or stabilization of the commodity prices ?

Speaker #18: Is it more macro or economic activity? Is it the only notable driver, or are there other drivers for potential recovery?

Speaker #5: Sure . So the incremental headwinds from commodities that we talked about in the quarter were about 20 basis points . So the continued slide we saw during the quarter that we talked about overcoming with our underlying margin expansion , and I would say , generally speaking , the best indicator would be the macro environment .

Mary Anne Whitney: Sure. The incremental headwinds from commodities that we talked about in the quarter were about 20 basis points. The continued slide we saw during the quarter that we talked about overcoming with our underlying margin expansion. I would say, generally speaking, the best indicator would be the macro environment, the overall demand, and, you know, visibility on that demand. You know, the good news is that there's been so much conversion in the United States of mills to taking recycled feedstock. That demand has been steadier and is far less influenced internationally. That's why I would argue that, you know, it could be a factor in the greater stability overall in those commodity prices, particularly OCC.

Speaker #5: The overall demand . And visibility on that demand . You know , the good news is that there's been so much conversion in the United States of Mills to taking recycled feedstock that demand has been steadier , and there's far less influence internationally .

Speaker #5: And that's why I would argue that it could be a factor in the greater stability overall in those commodity prices , particularly Oak .

Speaker #18: Just one more quick one . Is there on a government shutdown , if that's prolonged , is there any potential impact on customers decision making or contract or nothing really important ?

Yehuda Silverman: Got it. Just one more quick one. On a government shutdown, if that's prolonged, is there any potential impact on customers' decision-making or contracts or nothing really important?

Speaker #5: It's not so much government contracts; it would just be the overall activity and the lack of visibility there, to the extent it's influenced by a government shutdown.

Ron Mittelstaedt: It's not so much government contracts. It would just be the overall activity and, you know, the lack of visibility there to the extent that it's influenced by a government shutdown. I mean, we certainly might pick up at parks or things, but it's not a needle mover.

Speaker #5: I mean , we certainly might pick up at parks or things , but it's not a needle mover .

Speaker #18: Got it . Thank you .

Tony Bancroft: Got it. Thank you.

Yehuda Silverman: Got it. Thank you.

Speaker #5: Sure .

Ron Mittelstaedt: Sure.

Speaker #3: And our next question comes from Trevor Romeo from William Blair . Please go ahead with your question .

Operator: Our next question comes from Trevor Romeo from William Blair. Please go ahead with your question.

Speaker #19: Hey , good morning . Thanks for squeezing me in here . Just maybe a couple of quick landfill related questions . One , just on Arrowhead , I think maybe first , I guess .

Trevor Romeo: Good morning. Thanks for squeezing me in here. I'll just maybe a couple of quick landfill-related questions. One just on Arrowhead. I think maybe first, I guess, any update on tons going to the facility, whether those are still ramping? Then, you know, we have a big merger in the rail space, I guess, pending that could include some of the lines in that part of the country. Just wondering if you could maybe see any changes or impact to your service there if that merger is approved?

Speaker #19: Any update on tons going into the facility , whether those are still ramping . And then , you we have a big merger in the rail space .

Speaker #19: I guess pending that could include some of the lines in that part of the country . So just wondering if you could maybe see any changes or impact to your service there , if that merger is approved ?

Speaker #4: Yeah , sure . I'm happy to give you an update . So Arrowhead has continued to progress . We are now hitting about 7500 tons a day in Q3 at Arrowhead , recalling that when we acquired the site in August of 23 , so two years ago this quarter , it was about 25 to 2700 tons a day .

Ron Mittelstaedt: Yeah, sure. I'm happy to give you an update. Arrowhead has continued to progress. We are now hitting about 7,500 tons a day in Q3 at Arrowhead. Recalling that when we acquired the site in August 2023, so, 2 years ago this quarter, it was about 2,500 to 2,700 tons a day. We've, you know, made substantial progress there. I will also tell you that we have laid the foundation for incremental continued improvement in 2026 and 2027 in that we have built out incremental track at our landfill. When I say we have, actually Norfolk Southern has done it for us, of course, with our capital, and they've also done that at our Newark facility, loading facility outside of NY City.

Speaker #4: So we've , you know , made substantial progress there . I was I will also tell you that we have laid the foundation for incremental continued improvement in 26 and 27 , in that we have built out incremental track at our landfill .

Speaker #4: And when I say we have actually Norfolk Southern has done it for us , of course , with our capital , and they've also done that at our Newark facility .

Speaker #4: Loading facility outside of outside of New York City . Those two things were crucial for them to . Begin running a unit train for us , dedicated unit train multiple days a week .

Ron Mittelstaedt: Those 2 things were crucial for them to begin running a unit train for us, dedicated unit train, multiple days a week, that is actually scheduled to begin in the mid to late Q4 of this year. That will be very helpful to us. That will reduce transit times by potentially up to 25% to 30%. That helps the overall cost structure for Norfolk Southern, but also for us 'cause it requires less railcar capital from us as we expand because you're getting more turns on your existing railcars. Those are all good things.

Speaker #4: And that is actually scheduled to begin in the mid to late fourth quarter of this year . That would be will be very helpful to us .

Speaker #4: That will reduce transit times by potentially up to 25 to 30% . And that helps the overall cost structure for Norfolk Southern , but also for us because it requires less railcar capital from us as we expand .

Speaker #4: Because you're getting more turns on your existing railcars . So those are all good things . Yes . And the pending , you know , up Norfolk Southern merger , we you know , first off , we have a very long term contract with Norfolk Southern that , you know , will have no effect on or should have no effect from the merger .

Ron Mittelstaedt: Yes, and the pending, you know, UP, Norfolk Southern merger, we, you know, first off, we have a very long-term contract with Norfolk Southern that you know will have no effect on or should have no effect from the merger. We're not concerned about that. UP really does not pull in the lane segments that we are operating in, and Norfolk Southern is the predominant rail there. We really expect no material impact from their proposed merger.

Speaker #4: So we're not concerned about that . And Up really does not pull in the lane segments that we are operating in . And Norfolk Southern is the predominant rail there .

Speaker #4: So we really expect no material impact from their proposed merger.

Speaker #19: Okay . Thank you Ron . That's helpful and good news on the expansions . And then real quick on on Seneca meadows , I know you're going through kind of a permitting process for expansion there .

Trevor Romeo: Okay. Thank you, Ron. That's helpful and good news on the expansions. Real quick on Seneca Meadows, I know you're going through kind of a permitting process for an expansion there. Just any quick updates you could give us on how that process is going?

Speaker #19: Just any quick updates you could give us on how that process is going ?

Speaker #4: Yeah , I would tell you that really we are tracking about as expected , we remain very confident in our ability to get the expansion there , sort of a two step process .

Ron Mittelstaedt: Yeah. I would tell you that really we are tracking about as expected. We remain very confident in our ability to get the expansion. There's sort of a two-step process. Well, there's a three-step process with the biggest one being local host agreement approval, and we have achieved that. There was also a legal challenge by some township group there, and that has been effectively thwarted by the higher court in New York here in the last. Well, it's been stayed, is a better way to say it maybe than thwarted. We believe it's a good indication it will be thwarted, but it's been stayed. That's positive. There is a final technical demonstration through the state, you know, DTSC, and that is ongoing.

Speaker #4: Well , there's a three step process with the biggest one being local host agreement approval . And we have achieved that . It was also a legal challenge .

Speaker #4: By some township group there . And that has been effectively thwarted by the higher court in New York . Here in the last it's been stayed .

Speaker #4: It's a better way to say it maybe than thwarted . We believe it's a good indication it will be thwarted , but it's been stayed .

Speaker #4: So that's positive . And then there is a final technical demonstration through the state . You know , doc , and that is that is ongoing .

Speaker #4: So we again remain confident that we're on track to obtain it.

Ron Mittelstaedt: We again remain confident that we're on track to obtain it.

Speaker #19: All right. Thank you very much.

Trevor Romeo: All right. Thank you very much.

Speaker #3: Our next question comes from Stephanie Moore from Jefferies. Please go ahead with your question.

Operator: Our next question comes from Stephanie Moore from Jefferies. Please go ahead with your question.

Speaker #20: Hi . Good morning . Most of my questions have been asked . So apart from asking you , Ron and Marion , how you're doing , I think I'll just throw in .

Stephanie Moore: Hi. Good morning. Most of my questions have been asked. Apart from asking you, Ron and Maryann, how you're doing, I think I'll just throw in, you know, as you think about your M&A opportunity and your pipeline going forward, you know, is it, at this point, solely focused on kind of MSW deals, or is there a willingness to look outside of traditional MSW deals as well? Thank you.

Speaker #20: If you think about your M&A opportunity and and your pipeline going forward , is it at this point solely focused on kind of MSW deals , or is there a willingness to look outside of traditional MSW deals as well ?

Speaker #20: Thank you .

Speaker #4: Well , first off , Stephanie , thank you for asking how we're doing . Thankfully , we're doing all right . I appreciate that .

Ron Mittelstaedt: Well, first off, Stephanie, thank you for asking how we're doing. Thankfully, we're doing all right. Appreciate that. As far as our pipeline, there is nothing in the pipeline that is anything but traditional solid waste deals. That is what is in the pipeline. That is what you will see closing in Q4. That is what you will see closing in 2026. We are not looking at something that is outside of that, our sort of core arena, and do not believe there's any need to do so at this point in time.

Speaker #4: And as far as our pipeline, there is nothing in the pipeline that is anything but traditional solid waste deals. That is what is in the pipeline.

Speaker #4: That is what you will see closing in Q4. That is what you will see closing in 2026. And we are not looking at something that is outside of that.

Speaker #4: Our sort of core arena and do not believe there's any need to do so at this point in time .

Speaker #20: Very clear. Thank you.

Stephanie Moore: Very clear. Thank you.

Speaker #3: And our next question comes from Tony Bancroft from Gabelli Funds. Please go ahead with your question.

Operator: Our next question comes from Tony Bancroft from Gabelli Funds. Please go ahead with your question.

Speaker #21: Hey , Ron . And Maryanne , thanks so much . Great job on the quarter and great job overall . Just regarding maybe Ron , just you could I know it's very late in the game here , but regarding you know , your view on maybe how PFAS will play out .

Tony Bancroft: Hey, Ron and Maryann. Thanks so much. Great job on the quarter and great job overall. Just regarding, maybe Ron, just because I know it's very late in the game here, but regarding, you know, your view on, maybe how PFAS will play out. I know it's sort of been quieted recently. All these long-term liabilities always seem to pop their heads up again. I just wanna get your view on that at your landfills and the economics around that, maybe a quick hip pocket lecture. Then, you know, you've seen others talk about, you know, doing these plastics, plastic sort of, polymer plants. Just wanna get your view on what you think of the economics on that are long term.

Speaker #21: I know it's sort of been sort of been quieted recently , but all these long term liabilities always seem to pop their heads up again .

Speaker #21: I just want to get your view on on that at your landfills and the economics around that . Maybe a quick hip pocket lecture and then , you know , you've seen others talk about , you know , doing these plastic , plastic sort of polymer plants and just , just want to get your view on what you think of the economics on that are long term .

Speaker #21: Maybe just a just a quick hip pocket lecture . If you could .

Tony Bancroft: Maybe just a quick hip pocket lecture, if you could.

Speaker #4: Sure . I appreciate it , Tony . You know , look , with regard to PFAS , obviously things will continue to be codified through the federal government .

Ron Mittelstaedt: Sure. Appreciate it, Tony. You know, look, with regard to PFAS, obviously things will continue to be codified through the, you know, federal government. We as an industry and us as a company will react to that. I can tell you that we have been working on this for the better part of three years. We've narrowed down to two to three technologies, all of which are working and performing very well. We have bought portable units at multiple of our landfills, effectively utilizing what I would call sort of a, in effect, a solidification and stabilization of the PFAS from a leachate and removing it before you do anything with the leachate. Taking that PFAS, which is now in a solid form, and disposing of that properly.

Speaker #4: And we, as an industry and as a company, will react to that. I can tell you that we have been working on this for the better part of three years.

Speaker #4: We've narrowed down to 2 to 3 technologies , all of which are working and performing very well . We have bought portable units at multiple of our landfills , effectively utilizing what I would call sort of a , in effect , a solidification and stabilization of the PFAS from leachate and removing it before you do anything with the leachate and taking that PFAS , which is now in a solid form , and disposing of that properly .

Speaker #4: So we're very confident in our ability to comply with it . We're confident in our ability to pass those those appropriate costs on in our rate increases to our customers and and to demonstrate to , you know , publicly owned and privately owned wastewater treatment plants that the leachate is is below a level from a PFAS standpoint of any federal regulation .

Ron Mittelstaedt: We're very confident in our ability to comply with it. We're confident in our ability to pass those appropriate costs on, in our rate increases to our customers, and to demonstrate to, you know, publicly owned and privately owned, wastewater treatment plants that the leachate is below a level from a PFAS standpoint of any federal regulation. It is not a needle mover, in any direction, for us, on a real revenue opportunity or a real expense creep at this point in time. We remain confident in that.

Speaker #4: So it is it is not a needle mover in any direction for us on a , on a on a real revenue opportunity or a real expense creep at this point in time .

Speaker #4: So we remain confident in that , you know , plastics , you know , obviously , you know , one of the national companies has done a great job with their I think now two polymer centers , they've opened and plan to open a third , you know what I would say is those have been opened in in relatively large urban markets where where that company has a very nice position .

Ron Mittelstaedt: You know, plastics, you know, obviously, you know, one of the national companies has done a great job with their, I think now two polymer centers they've opened and plan to open a third. You know, what I would say is those have been opened in relatively large urban markets where that company has a very nice position, and I think it makes tremendous sense. I think they're demonstrating that it makes good sense there, financially, and sustainability-wise. You know, we are looking at some similar things, not a polymer center, but some similar plastic separation treatment technologies that could make sense. We're not prepared to say that they do, but we are moving down a road testing some of them. I would stay tuned on that.

Speaker #4: And I think it makes tremendous sense . And I think there demonstrating that it makes good sense there financially and sustainability wise . You know , we are looking at some similar things , not a polymer center , but some similar plastic separation treatment technologies that could make sense .

Speaker #4: We're not prepared to say that they do, but we are. We are moving down a road, testing some of them. So I would stay tuned on that.

Speaker #4: You know , as you may know right now , plastics have been falling . And so but but the demand and the EPR requirements that are moving on through certain of the states , you're going to need to address plastics .

Ron Mittelstaedt: You know, as you may know, right now, plastics have been falling. But the demand and the EPR requirements that are moving on through certain of the states, you're going to need to address plastics, we as a company and us as an industry to help those states comply with their EPR legislation. It'll be a continued developing area.

Speaker #4: We as a company and us as an industry to to help those states comply with their EPR legislation . So it'll be a continued developing area .

Speaker #5: The one thing I would add, Tony, is just to keep in mind that plastics are a tiny fraction of the overall stream of recyclables.

Mary Anne Whitney: The one thing I would add, Tony, is just keep in mind that plastics are a tiny fraction of the overall stream of recyclables. To Ron's point, if you have a critical mass in one area, the mass will be very different from having a small amount in lots of markets.

Speaker #5: And to Ron's point , if you have a critical mass in one area , the math would be very different from having a small amount in lots of markets .

Speaker #21: Yeah . Thanks so much . Great job .

Ron Mittelstaedt: Yeah.

Tony Bancroft: Thanks so much. Great job.

Speaker #4: Thank you .

Speaker #22: Thanks .

Ron Mittelstaedt: Thank you.

Speaker #3: And ladies and gentlemen , with that , we'll be concluding today's question and answer session . I'd like to turn the floor back over to the management team for any closing remarks .

Mary Anne Whitney: Thanks.

Operator: Ladies and gentlemen, with that, we'll be concluding today's question and answer session. I'd like to turn the floor back over to the management team for any closing remarks.

Speaker #4: Okay . Thank you . Operator . Well , if there are no further questions on behalf of our entire management team , we appreciate your listening to and interest in our call today .

Ron Mittelstaedt: Okay. Thank you, operator. Well, if there are no further questions, on behalf of our entire management team, we appreciate your listening to and interest in our call today. Mary Anne and Joe Box are available today to answer any direct questions that we did not cover that we are allowed to answer under Regulation FD, Regulation G, and applicable securities laws in Canada. Thank you again, and we look forward to connecting with you at upcoming investor conferences or on our next earnings call.

Speaker #4: Marianne and Joe Box are available today to answer any direct questions that we did not cover , that we are allowed to answer under regulation FD , regulation JY and applicable securities laws in Canada .

Speaker #4: Thank you again, and we look forward to connecting with you at upcoming investor conferences or on our next earnings call.

Speaker #3: Ladies and gentlemen , with that , we'll conclude today's conference call and presentation . We do . Thank you for joining . You may now disconnect your lines .

Operator: Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.

Ron Mittelstaedt: Thank you.

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