Waste Management Q4 2025 Waste Management Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Waste Management Inc Earnings Call
Um, our participants on a listen-only mode. After the speaker's presentation, there will be a question and answer session to ask a question during the session. You will need to press star 1, 1 on your telephone. You will then hear an automated message advising. Your hand is raised to retry a question. Please press star 1 1 again, please, note that today's conference is being recorded, I will now hand the conference over to your speaker host at ago. Vice president of Investigations, please go ahead.
Thank you, Olivia. Good morning, everyone. And thank you for joining us for our fourth quarter and full year 2025 earnings conference call.
Good day, and thank you for standing by. Welcome to the WM Q4 2025 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star, one, one again. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Ed Egl, Vice President of Investor Relations. Please go ahead.
With me this morning are Jim fish, chief executive officer, John Morris president and Chief Operating Officer and David Reid, Executive Vice President and Chief Financial Officer. You here, prepare comments from each of them. Today Jim will cover high level financials and provide a strategic update draw will cover our operating overview and David will cover the details of the financials.
Before we get started, please note that we have filed a Form 8K. That includes the earnings press release that is available on our website at www.wm.com.
The Form 8K, the press release and the schedules of the press release include important information.
Ed Egl: Thank you, Olivia. Good morning, everyone, and thank you for joining us for our Q4 and full year 2025 earnings conference call.
During a call, you will hear forward-looking statements which are based on current expectations projections, or opinions about future periods. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties are discussed in. Today's press release, and in our filings, with the SEC, including the most recent form, 10 K and form 10 cues.
Edward Egl: With me this morning are Jim Fish, Chief Executive Officer; John Morris, President and Chief Operating Officer; and David Reed, Executive Vice President and Chief Financial Officer. You'll hear prepared comments from each of them today. Jim will cover high-level financials and provide a strategic update. John will cover an operating overview, and David will cover the details of the financials. Before we get started, please note that we have filed a Form 8K that includes the earnings press release and is available on our website at www.wm.com. The Form 8K, the press release, and the schedules of the press release include important information. During the call, you will hear forward-looking statements which are based on current expectations, projections, or opinions about future periods. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.
With me this morning are Jim Fish, Chief Executive Officer; John Morris, President and Chief Operating Officer; and David Reed, Executive Vice President and Chief Financial Officer. You'll hear prepared comments from each of them today. Jim will cover high-level financials and provide a strategic update. John will cover an operating overview, and David will cover the details of the financials. Before we get started, please note that we have filed a Form 8K that includes the earnings press release and is available on our website at www.wm.com. The Form 8K, the press release, and the schedules of the press release include important information. During the call, you will hear forward-looking statements which are based on current expectations, projections, or opinions about future periods. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.
Drive will discuss our results in the area of volume, which unless stated, otherwise are more specifically references to Internal Revenue growth or IRG from volume.
During the call Jim John and David will discuss operating iida which is income from operations before depreciation, depletion, and amortization.
Speaker #2: we have filed a Form 8K that includes the earnings press release and is available on our website at www.wm.com. The Form 8K, the press release, and the schedules for the press release include important information.
References to the Legacy business are total. WM results. Excluding the healthcare solution segment.
Any comparisons unless otherwise stated will be with the prior year period net income, EPS income from operations and margin operating ibidi and margin operating expense and margin in sgna expense and margin have been adjusted to enhance comparability by excluding certain items that management believes do not reflect our fundamental business performance or results of operations.
Edward Egl: Some of these risks and uncertainties are discussed in today's press release and in our filings with the SEC, including the most recent Form 10-K and Form 10-Qs. John will discuss our results in the area of volume, which, unless stated otherwise, are more specifically references to internal revenue growth or IRG from volume. During the call, Jim, John, and David will discuss Operating EBITDA, which is income from operations before depreciation, depletion, and amortization. References to the legacy business are total WM results excluding the healthcare solutions segment. Any comparisons, unless otherwise stated, will be with the prior year period. Net income, EPS, income from operations and margin, Operating EBITDA and margin, operating expense and margin, and SG&A expense and margin have been adjusted to enhance comparability by excluding certain items that management believes do not reflect our fundamental business performance or results of operations.
Some of these risks and uncertainties are discussed in today's press release and in our filings with the SEC, including the most recent Form 10-K and Form 10-Qs. John will discuss our results in the area of volume, which, unless stated otherwise, are more specifically references to internal revenue growth or IRG from volume. During the call, Jim, John, and David will discuss Operating EBITDA, which is income from operations before depreciation, depletion, and amortization. References to the legacy business are total WM results excluding the healthcare solutions segment. Any comparisons, unless otherwise stated, will be with the prior year period. Net income, EPS, income from operations and margin, Operating EBITDA and margin, operating expense and margin, and SG&A expense and margin have been adjusted to enhance comparability by excluding certain items that management believes do not reflect our fundamental business performance or results of operations.
These adjusted measures in addition to free cash. Flow are non-gaap measures.
please refer to the earnings press release and tables, which can be found on the company's website at www.wm.com
For reconciliation to the most comparable gaap measures and additional information about our use of non-gaap measures.
This call is being recorded and will be available 24 hours a day. Beginning approximately 1 pm eastern time. Today to hear a replay of the call access. The WM website at www.investors.com time-sensitive information provided during today's call, which is our current on January 29th. 2026 May no longer be accurate at the time of a replay.
Any redistribution retransmission or rebroadcast of this call in any form without the express, written consent of WMS prohibited.
Now starting to call over to WM CEO. Jim fish.
Okay. Thanks. Ed.
And thank you all for joining us.
Edward Egl: These adjusted measures, in addition to free cash flow, are non-GAAP measures. Please refer to the earnings press release and tables, which can be found on the company's website at www.wm.com, for reconciliation to the most comparable GAAP measures and additional information about our use of non-GAAP measures. This call is being recorded and will be available 24 hours a day, beginning approximately 1:00PM Eastern Time today. To hear a replay of the call, access the WM website at www.investors.wm.com. Time-sensitive information provided during today's call, which is occurring on 29 January 2026, may no longer be accurate at the time of a replay. Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of WM is prohibited. Now I'll turn the call over to WM CEO, Jim Fish. Okay, thanks, Ed. And thank you all for joining us.
These adjusted measures, in addition to free cash flow, are non-GAAP measures. Please refer to the earnings press release and tables, which can be found on the company's website at www.wm.com, for reconciliation to the most comparable GAAP measures and additional information about our use of non-GAAP measures. This call is being recorded and will be available 24 hours a day, beginning approximately 1:00PM Eastern Time today. To hear a replay of the call, access the WM website at www.investors.wm.com. Time-sensitive information provided during today's call, which is occurring on 29 January 2026, may no longer be accurate at the time of a replay. Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of WM is prohibited. Now I'll turn the call over to WM CEO, Jim Fish.
We're pleased to report another year of outstanding results in 2025, including a record performance in operating expenses at as a percent of Revenue.
this performance combined with our disciplined approach to pricing drove full year operating, even though margin 150 basis points higher in the Legacy business,
Strong operational performance, translated to double digit growth in cash, flow from operations, and nearly 27% growth in free, cash flow.
Our results highlight the strength and momentum, we built in our business model through operational excellence.
Scaling sustainability businesses.
And integration of healthcare Solutions.
Jim Fish: Okay, thanks, Ed. And thank you all for joining us.
You've heard me talk about the strength of our collection and Disposal business with our differentiated assets and the best people in the industry.
Edward Egl: We're pleased to report another year of outstanding results in 2025, including a record performance in operating expenses as a percent of revenue. This performance, combined with our disciplined approach to pricing, drove full-year operating EBITDA margin 150 basis points higher in the legacy business. Strong operational performance translated to double-digit growth in cash flow from operations and nearly 27% growth in free cash flow. Our results highlight the strength and momentum we built in our business model through operational excellence, scaling sustainability businesses, and integration of healthcare solutions. You've heard me talk about the strength of our collection and disposal business with our differentiated assets and the best people in the industry. All of these were on display in 2025 as we drove our best-ever operating leverage in our collection and disposal business, reflecting the intentional investments we've made in our people, technology, and fleet.
We're pleased to report another year of outstanding results in 2025, including a record performance in operating expenses as a percent of revenue. This performance, combined with our disciplined approach to pricing, drove full-year operating EBITDA margin 150 basis points higher in the legacy business. Strong operational performance translated to double-digit growth in cash flow from operations and nearly 27% growth in free cash flow. Our results highlight the strength and momentum we built in our business model through operational excellence, scaling sustainability businesses, and integration of healthcare solutions. You've heard me talk about the strength of our collection and disposal business with our differentiated assets and the best people in the industry. All of these were on display in 2025 as we drove our best-ever operating leverage in our collection and disposal business, reflecting the intentional investments we've made in our people, technology, and fleet.
All of these were on display in 2025.
As we drove our best ever, operating leverage in our collection and Disposal business.
Reflecting the intentional Investments we've made in our people.
Technology and Fleet.
Better Frontline retention and a decreased average age of our trucks delivered improvements in labor and maintenance costs.
Meanwhile we continue to drive, organic Revenue growth from both price and volume.
By using data and analytics. We're offering pricing that reflects the premium value of our service.
Our leading commitment to environmental sustainability.
And the strength of our net of our asset Network.
It's our unmatched Network, particularly our transfer, and Disposal assets. That drove volume growth in 2025, more than offsetting the residential, volume declines.
as we shed some low margin business,
25 was here of teamwork, focus and execution to build momentum to our integration.
Edward Egl: Better frontline retention and a decreased average age of our trucks delivered improvements in labor and maintenance costs. Meanwhile, we continue to drive organic revenue growth from both price and volume. By using data and analytics, we're offering pricing that reflects the premium value of our service, our leading commitment to environmental sustainability, and the strength of our asset network. It's our unmatched network, particularly our transfer and disposal assets, that drove volume growth in 2025, more than offsetting the residential volume declines as we shed some low-margin business. In our healthcare solutions business, 2025 was a year of teamwork, focus, and execution to build momentum to our integration. Our service delivery metrics and customer service scores have improved to levels above our legacy business. Customer call volume has been trending down, and the standardization and enhancement of customer-facing processes and invoices are all leading to rising customer satisfaction.
Better frontline retention and a decreased average age of our trucks delivered improvements in labor and maintenance costs. Meanwhile, we continue to drive organic revenue growth from both price and volume. By using data and analytics, we're offering pricing that reflects the premium value of our service, our leading commitment to environmental sustainability, and the strength of our asset network. It's our unmatched network, particularly our transfer and disposal assets, that drove volume growth in 2025, more than offsetting the residential volume declines as we shed some low-margin business. In our healthcare solutions business, 2025 was a year of teamwork, focus, and execution to build momentum to our integration. Our service delivery metrics and customer service scores have improved to levels above our legacy business. Customer call volume has been trending down, and the standardization and enhancement of customer-facing processes and invoices are all leading to rising customer satisfaction.
our service delivery metrics and customer service scores have improved to levels above our Legacy business,
Customer call volume has been trending down.
and the standardization and enhancement of customer-facing, processes and invoices are all leading to Rising customer satisfaction
Just last week, we received an acknowledgement from 1 of our largest Healthcare Solutions customers for the improvements. We've made on invoicing, which is a great indicator of the significant progress we've made.
In the last year, in our systems and back office processes.
At the same time, we continue to significantly reduce sgna and operating costs.
Streamline our operations and greatly improve asset efficiencies.
While there's still work to do progress. We've made to date puts us in a good position, to grow the earnings and cash flow from this business with a lean and efficient cost structure. A healthy pricing environment and new opportunities for volume growth through both cross-selling and market share expansion.
On the sustainability front.
We drove notable strategic expansion in our sustainability businesses.
Edward Egl: Just last week, we received an acknowledgment from one of our largest healthcare solutions customers for the improvements we've made on invoicing, which is a great indicator of the significant progress we've made in the last year in our systems and back-office processes. At the same time, we continue to significantly reduce SG&A and operating costs, streamline our operations, and greatly improve asset efficiencies. While there's still work to do, the progress we've made to date puts us in a good position to grow the earnings and cash flow from this business with a lean and efficient cost structure, a healthy pricing environment, and new opportunities for volume growth through both cross-selling and market share expansion. On the sustainability front, we drove notable strategic expansion in our sustainability businesses.
Just last week, we received an acknowledgment from one of our largest healthcare solutions customers for the improvements we've made on invoicing, which is a great indicator of the significant progress we've made in the last year in our systems and back-office processes. At the same time, we continue to significantly reduce SG&A and operating costs, streamline our operations, and greatly improve asset efficiencies. While there's still work to do, the progress we've made to date puts us in a good position to grow the earnings and cash flow from this business with a lean and efficient cost structure, a healthy pricing environment, and new opportunities for volume growth through both cross-selling and market share expansion. On the sustainability front, we drove notable strategic expansion in our sustainability businesses.
We commissioned 7, new renewable, natural gas facilities. Expanding our renewable energy Network and further positioning. WM as a leader in environmental sustainability.
We completed automation upgrades at 5 recycling facilities and added facilities in 4 new markets.
Which are enhancing the performance of our recycling Network and creating new opportunities with customers.
the value of our recycling Investments is clear, particularly, when you consider our recycling, segment delivered over 22% operating Aid, dog growth, despite nearly 20% lower commodity prices in 2025,
This combination of operational excellence and Strategic investment across our business as produced record, margin performance and accelerated cash generation.
Edward Egl: We commissioned 7 new renewable natural gas facilities, expanding our renewable energy network and further positioning WM as a leader in environmental sustainability. We completed automation upgrades at 5 recycling facilities and added facilities in 4 new markets, which are enhancing the performance of our recycling network and creating new opportunities with customers. The value of our recycling investments is clear, particularly when you consider our recycling segment delivered over 22% Operating EBITDA growth despite nearly 20% lower commodity prices in 2025. This combination of operational excellence and strategic investment across our business has produced record margin performance and accelerated cash generation. As we enter 2026, we're well-positioned to convert more of our earnings into long-term shareholder value. Turning to our outlook, we expect continued strong growth in the year ahead.
We commissioned 7 new renewable natural gas facilities, expanding our renewable energy network and further positioning WM as a leader in environmental sustainability. We completed automation upgrades at 5 recycling facilities and added facilities in 4 new markets, which are enhancing the performance of our recycling network and creating new opportunities with customers. The value of our recycling investments is clear, particularly when you consider our recycling segment delivered over 22% Operating EBITDA growth despite nearly 20% lower commodity prices in 2025. This combination of operational excellence and strategic investment across our business has produced record margin performance and accelerated cash generation. As we enter 2026, we're well-positioned to convert more of our earnings into long-term shareholder value. Turning to our outlook, we expect continued strong growth in the year ahead.
As we enter 2026, we're well positioned to convert more of our earnings into long-term shareholder value.
Turning to our Outlook.
We expect continued strong growth in the year ahead.
Our guidance is for operating, a dog growth of 6.2% at the midpoint or 7.4% when you normalize for Wildfire cleanup volumes in 2025.
Speaker #2: investments is clear, particularly when you consider our recycling segment delivered over 22% operating EBITDA growth despite nearly 20% lower commodity prices, in 2025. This combination of operational excellence and strategic investment across our business has produced record margin performance and accelerated cash generation as we enter 2026.
Free cash flow is expected to grow nearly 30% at the midpoint reflecting structural earning strength and the benefit of our investments.
As announced in December, our board approved a 14.5% increase in the planned quarterly dividend rate in 2026. Our 23rd consecutive year of dividend growth.
We also offer authorized a new 3 billion. Share repurchase program.
We plan to return about 3.5 billion dollars to shareholders through dividends and share purchases in 2026.
Speaker #2: more of our earnings into long-term During the call, you will hear forward-looking We're well positioned to convert shareholder value. Turning to our outlook, we expect continued strong growth in the year ahead.
Representing more than 90% to free cash flow.
We expect to generate.
Speaker #2: Our guidance is for operating EBITDA growth of 6.2% at the midpoint, or 7.4% when you normalize for wildfire cleanup volumes, in 2025. Free cash flow is expected to grow nearly 30% at the midpoint, reflecting structural earnings strength and the benefit of our investments.
Edward Egl: Our guidance is for Operating EBITDA growth of 6.2% at the midpoint, or 7.4% when you normalize for wildfire cleanup volumes in 2025. Free Cash Flow is expected to grow nearly 30% at the midpoint, reflecting structural earnings strength and the benefit of our investments. As announced in December, our board approved a 14.5% increase in the planned quarterly dividend rate in 2026, our 23rd consecutive year of dividend growth. We also authorized a new $3 billion share purchase program. We plan to return about $3.5 billion to shareholders through dividends and share purchases in 2026, representing more than 90% of Free Cash Flow we expect to generate. We will continue to balance these returns with disciplined reinvestment, tuck-in M&A, and a solid investment-grade credit profile. Looking ahead, our priorities are clear. First, growing the core business by leveraging our focus on customer lifetime value, operational excellence, and network advantages.
Our guidance is for Operating EBITDA growth of 6.2% at the midpoint, or 7.4% when you normalize for wildfire cleanup volumes in 2025. Free Cash Flow is expected to grow nearly 30% at the midpoint, reflecting structural earnings strength and the benefit of our investments. As announced in December, our board approved a 14.5% increase in the planned quarterly dividend rate in 2026, our 23rd consecutive year of dividend growth. We also authorized a new $3 billion share purchase program. We plan to return about $3.5 billion to shareholders through dividends and share purchases in 2026, representing more than 90% of Free Cash Flow we expect to generate. We will continue to balance these returns with disciplined reinvestment, tuck-in M&A, and a solid investment-grade credit profile. Looking ahead, our priorities are clear. First, growing the core business by leveraging our focus on customer lifetime value, operational excellence, and network advantages.
We will continue to balance these returns with disciplined reinvestment. Tucking m&a, and a solid investment grade credit profile.
Looking ahead, our priorities are clear.
Speaker #2: As announced in December, our board approved a $14.5% increase in the planned quarterly dividend rate in 2026. Our 23rd consecutive year of dividend growth.
First growing The Core Business, by leveraging our focus on customer lifetime value, operational excellence and network advantages, second, capturing and maximizing returns from our investments, in our Recycling and renewable energy, businesses and third driving, a creative growth in healthcare Solutions. As we take the business from integration to scalable growth,
finally, executing
Speaker #2: We also authorized a new $3 billion share repurchase program. We plan to return about $3.5 billion to shareholders through dividends and share repurchases in 2026, representing more than 90% of free cash flow we expect to generate.
Our disciplined Capital, allocation plan to deliver compelling long-term shareholder value.
Our results, reflect through the hard work of our entire team.
Who serve our customers with pride every day. Their commitment fuels our performance and sets the foundation for the opportunities ahead.
Speaker #2: We will continue to balance these returns with disciplined reinvestment, tucking M&A, and a solid investment-grade credit profile. Looking ahead, our priorities are clear. First, growing the core business by leveraging our focus on customer lifetime value, operational excellence, and network advantages.
in 2026, we will build this momentum strengthening the core scaling our growth platforms and creating meaningful value for all our stakeholders
I'm incredibly proud of what we've accomplished and excited for what's ahead. And with that I'll turn the call over to John to provide more detail on our operational.
Speaker #2: Second, capturing and maximizing returns from our investments in our recycling and renewable energy businesses. And third, driving a creative growth in healthcare solutions as we take the business from integration to scalable growth.
Edward Egl: Second, capturing and maximizing returns from our investments in our recycling and renewable energy businesses. And third, driving accretive growth in healthcare solutions as we take the business from integration to scalable growth. Finally, executing our disciplined capital allocation plan to deliver compelling long-term shareholder value. Our results reflect the hard work of our entire team, who serve our customers with pride every day. Their commitment fuels our performance and sets the foundation for the opportunities ahead. In 2026, we will build this momentum, strengthening the core, scaling our growth platforms, and creating meaningful value for all our stakeholders. I'm incredibly proud of what we've accomplished and excited for what's ahead. And with that, I'll turn the call over to John to provide more detail on our operational performance. Thanks, Jim. And good morning.
Second, capturing and maximizing returns from our investments in our recycling and renewable energy businesses. And third, driving accretive growth in healthcare solutions as we take the business from integration to scalable growth. Finally, executing our disciplined capital allocation plan to deliver compelling long-term shareholder value. Our results reflect the hard work of our entire team, who serve our customers with pride every day. Their commitment fuels our performance and sets the foundation for the opportunities ahead. In 2026, we will build this momentum, strengthening the core, scaling our growth platforms, and creating meaningful value for all our stakeholders. I'm incredibly proud of what we've accomplished and excited for what's ahead. And with that, I'll turn the call over to John to provide more detail on our operational performance.
Thanks Jim, uh, and good morning.
Speaker #2: Finally, executing our disciplined capital allocation plan to deliver compelling long-term shareholder value. Our results reflect the hard work of our entire team, who serve our customers fuels our performance and sets the foundation for the opportunities ahead.
WM delivered, another fantastic quarter to close 2025 driven by discipline pricing and continued cost efficiencies across the business. And the fourth quarter operating Evita on our collection and Disposal business, grew more than 8% and operating ebita margin expanded by 160 basis points.
Supported by strong execution, in the ongoing benefits of Automation, and Technology across our operations.
Speaker #2: In 2026, we will build this momentum by strengthening the core, scaling our growth platforms, and creating meaningful value for all our stakeholders. I'm incredibly proud of what we've accomplished and excited for what's ahead.
Speaker #2: And with that, I'll turn the call over to John to provide more detail on our operational
Speaker #2: performance. Thanks, Jim.
Marking our third consecutive quarter below 60% and for the full year, our cost management is just as impressive, we finished 2025 at 59.5%, which is the first time in company history, that operating expenses have come in below. 60% for a year with each quarter of 2025 improving sequentially.
John Morris: Thanks, Jim. And good morning.
Speaker #1: And good morning. WM delivered another fantastic quarter to close 2025, driven by disciplined pricing and continued cost efficiencies across the business. In the fourth quarter, operating EBITDA and our collection and disposal business grew more than 8%, and operating EBITDA margin expanded by 160 basis points.
Edward Egl: WM delivered another fantastic Q2 to close 2025, driven by disciplined pricing and continued cost efficiencies across the business. In the Q4, Operating EBITDA in our Collection and Disposal business grew more than 8%, and Operating EBITDA margin expanded by 160 basis points, supported by strong execution and the ongoing benefits of automation and technology across our operations. The strength in Q4 was driven by operating expenses as a percentage of revenue improving 180 basis points to 58.5%, marking our third consecutive quarter below 60%. For the full year, our cost management is just as impressive. We finished 2025 at 59.5%, which is the first time in company history that operating expenses have come in below 60% for a year, with each quarter of 2025 improving sequentially.
WM delivered another fantastic Q2 to close 2025, driven by disciplined pricing and continued cost efficiencies across the business. In the Q4, Operating EBITDA in our Collection and Disposal business grew more than 8%, and Operating EBITDA margin expanded by 160 basis points, supported by strong execution and the ongoing benefits of automation and technology across our operations. The strength in Q4 was driven by operating expenses as a percentage of revenue improving 180 basis points to 58.5%, marking our third consecutive quarter below 60%. For the full year, our cost management is just as impressive. We finished 2025 at 59.5%, which is the first time in company history that operating expenses have come in below 60% for a year, with each quarter of 2025 improving sequentially.
As I said, on investor day, we are fundamentally changing our cost structure through the Investments. We're making in our people technology and processes 2020. 2025 was the year, we proved that changes real and durable and we're well positioned to continue capturing these benefits for years to come.
Speaker #1: Supported by a strong execution and the ongoing benefits of automation and technology across our operations. The strength in Q4 was driven by operating expenses as a percentage of revenue improving 180 basis points to 58.5%, marking our third consecutive quarter below 60%.
The Improvement operating costs was led by substantial Improvement in repair and maintenance costs on both a dollar basis. And as a percentage of Revenue,
Driven by operational and Fleet strategies, they're yielding tangible benefits.
Speaker #1: And for the full year, our cost management is just as impressive. We finished 2025 at 59.5%, which is the first time in company history that operating expenses have come in below 60% for a year, with each quarter of 2025 improving sequentially.
Accelerated investments in new trucks. Over the last 3 years has improved. Our average Fleet age significantly reducing unplanned repairs and the need for third-party maintenance support. At the same time, our discipline focus on fleet optimization and a more streamlined, maintenance model, increase technician, productivity, and reduce Reliance on rental units and external services.
Speaker #1: As I said on Investor Day, we are fundamentally changing our cost structure through the investments we're making in our people, technology, and processes. 2025 was the year we proved the changes real and durable, and we're well positioned to continue capturing these benefits for years to come.
Edward Egl: As I said on Investor Day, we are fundamentally changing our cost structure through the investments we're making in our people, technology, and processes. 2025 was the year we proved the change is real and durable, and we're well-positioned to continue capturing these benefits for years to come. The improvement in operating costs was led by substantial improvement in repair and maintenance costs on both a dollar basis and as a percentage of revenue, driven by operational and fleet strategies that are yielding tangible benefits. Accelerated investments in new trucks over the last three years have improved our average fleet age, significantly reducing unplanned repairs and the need for third-party maintenance support. At the same time, our disciplined focus on fleet optimization and a more streamlined maintenance model increased technician productivity and reduced reliance on rental units and external services.
As I said on Investor Day, we are fundamentally changing our cost structure through the investments we're making in our people, technology, and processes. 2025 was the year we proved the change is real and durable, and we're well-positioned to continue capturing these benefits for years to come. The improvement in operating costs was led by substantial improvement in repair and maintenance costs on both a dollar basis and as a percentage of revenue, driven by operational and fleet strategies that are yielding tangible benefits. Accelerated investments in new trucks over the last three years have improved our average fleet age, significantly reducing unplanned repairs and the need for third-party maintenance support. At the same time, our disciplined focus on fleet optimization and a more streamlined maintenance model increased technician productivity and reduced reliance on rental units and external services.
These structural improvements were complemented by enhanced route. Automation and resource planning tools that lessen wear on the fleet and improve overall asset utilization and taken together these initiatives, reflect our strategic commitment, to operational, excellence and are driving sustained cost efficiencies that strengthen our performance.
Speaker #1: The improvement in operating costs was led by substantial improvement in repair and maintenance costs on both a dollar basis and as a percentage of revenue, driven by operational and fleet strategies that are yielding tangible benefits.
A repair and maintenance costs were not the only cost category reflecting the strength of our operating model. As we saw similar story and labor.
Speaker #1: Accelerated investments in new trucks over the last three years have improved our average fleet age, significantly reducing unplanned repairs and the need for third-party maintenance support.
In Q4 labor costs improve as we continue to see benefits from our people. First culture across our Frontline teams.
Driver, turnover reached. Its lowest level of the year at 15.7%?
Demonstrating our ability to sustain our meaningful improvements in Frontline, retention.
Speaker #1: And at the same time, our discipline focus on fleet optimization and a more streamlined maintenance model increased technician productivity and reduced reliance on rental units and external services.
We've implemented a people-centric approach to onboarding training and accountability which is improving retention safety and operating efficiency while also reducing overtime hours and training needs.
Speaker #1: These structural improvements were complemented by enhanced route automation and resource planning tools that lessen wear on the fleet and improve overall asset utilization. Taken together, these initiatives reflect our strategic commitment to operational excellence and are driving sustained cost efficiencies that strengthen our performance.
Edward Egl: These structural improvements were complemented by enhanced route automation and resource planning tools that lessen wear on the fleet and improve overall asset utilization. Taken together, these initiatives reflect our strategic commitment to operational excellence and are driving sustained cost efficiencies that strengthen our performance. Our repair and maintenance costs were not the only cost category reflecting the strength of our operating model, as we saw a similar story in labor. In Q4, labor costs improved as we continued to see benefits from our people-first culture across our frontline teams. Driver turnover reached its lowest level of the year at 15.7%, demonstrating our ability to sustain our meaningful improvements in frontline retention. We've implemented a people-centric approach to onboarding, training, and accountability, which is improving retention, safety, and operating efficiency while also reducing overtime hours and training needs.
These structural improvements were complemented by enhanced route automation and resource planning tools that lessen wear on the fleet and improve overall asset utilization. Taken together, these initiatives reflect our strategic commitment to operational excellence and are driving sustained cost efficiencies that strengthen our performance. Our repair and maintenance costs were not the only cost category reflecting the strength of our operating model, as we saw a similar story in labor. In Q4, labor costs improved as we continued to see benefits from our people-first culture across our frontline teams. Driver turnover reached its lowest level of the year at 15.7%, demonstrating our ability to sustain our meaningful improvements in frontline retention. We've implemented a people-centric approach to onboarding, training, and accountability, which is improving retention, safety, and operating efficiency while also reducing overtime hours and training needs.
Speaker #1: Our repair and maintenance costs were not the only cost category reflecting the strength of our operating model. As we saw similar story in labor, in Q4, labor costs improved as we continued to see benefits from our people-first culture across our frontline teams.
We also benefited from our connected truck truck platform which gives leaders real-time visibility into sequencing downtime and efficiency to help reduce labor dependency, while improving service, reliability? And it's also worth noting that can or connected truck benefits are not limited to cost advantages as the technology enables right sizing service levels and other Revenue opportunities.
Speaker #1: Driver turnover reached its lowest level of the year at 15.7%. Demonstrating our ability to sustain our meaningful improvements in frontline retention. We've implemented a people-centric approach to onboarding, training, and accountability, which is improving retention, safety, and operating efficiency while also reducing overtime hours and training needs.
And network optimization.
In both the Legacy business and the healthcare Solutions business. We are structurally lowering our labor cost based
Speaker #1: We also benefited from our connected truck platform, which gives leaders real-time visibility into sequencing, downtime, and efficiency to help reduce labor dependency while improving service reliability.
Edward Egl: We also benefited from our Connected Truck platform, which gives leaders real-time visibility into sequencing, downtime, and efficiency to help reduce labor dependency while improving service reliability. It's also worth noting that our Connected Truck benefits are not limited to cost advantages, as the technology enables right-sizing service levels and other revenue opportunities. These people, process, and technology-driven improvements extend beyond our legacy business. Now that we've successfully integrated the healthcare solutions business into our existing field operations management structure, we expect to extend these improvements we've already seen in on-time service delivery, driver turnover, asset rationalization, and network optimization. In both the legacy business and the healthcare solutions business, we are structurally lowering our labor cost base, strengthening day-to-day execution, enhancing service reliability, and delivering continued opportunities for long-term operating improvements. Turning to the top line, we delivered another quarter of strong balanced growth.
We also benefited from our Connected Truck platform, which gives leaders real-time visibility into sequencing, downtime, and efficiency to help reduce labor dependency while improving service reliability. It's also worth noting that our Connected Truck benefits are not limited to cost advantages, as the technology enables right-sizing service levels and other revenue opportunities. These people, process, and technology-driven improvements extend beyond our legacy business. Now that we've successfully integrated the healthcare solutions business into our existing field operations management structure, we expect to extend these improvements we've already seen in on-time service delivery, driver turnover, asset rationalization, and network optimization. In both the legacy business and the healthcare solutions business, we are structurally lowering our labor cost base, strengthening day-to-day execution, enhancing service reliability, and delivering continued opportunities for long-term operating improvements. Turning to the top line, we delivered another quarter of strong balanced growth.
Strengthening day-to-day execution enhancing service reliability and delivering continued opportunities for long-term operating improvements.
Speaker #1: And it's also worth noting that our connected truck benefits are not limited to cost advantages. As the technology enables right-sizing service levels and other revenue opportunities.
Speaker #1: These people, process, and technology-driven improvements extend beyond our legacy business. And now that we've successfully integrated the healthcare solutions business into our existing field operations management structure, we expect to extend these improvements we've already seen in on-time service delivery, driver turnover, asset rationalization, and network optimization.
Turning to the Top Line, we delivered another quarter of strong balanced, growth pricing continues to be a strength for us with core price of 6.2 in the fourth quarter. Not just because of discipline execution, but because of our strong customer focus and the consistent value, we provide to our customers
Our asset positioning and scale, service, reliability, and the Investments we've made in technology and automation differentiate our service offering, which all support our pricing.
Speaker #1: In both the legacy business and the healthcare solutions business, we are structurally lowering our labor cost base, strengthening day-to-day execution, enhancing service reliability, and delivering continued opportunities for long-term operating improvements.
And on the volume front, we've seen notable growth in 2025 and special ways renewable energy and recycling in residential collection, intentional shedding moderated in the fourth quarter. And we continue to drive operating IBA and margin growth.
We anticipate steady residential volume Improvement as we move through 2026.
New closing.
Speaker #1: Turning to the top line, we delivered another quarter of strong balanced growth. Pricing continues to be a strength for us, with core price of 6.2% in the fourth quarter, not just because of discipline execution, but because of our strong customer focus and the consistent value we provide to our customers.
Edward Egl: Pricing continues to be a strength for us, with core price of 6.2% in the Q4, not just because of disciplined execution, but because of our strong customer focus and the consistent value we provide to our customers. Our asset positioning and scale, service reliability, and the investments we've made in technology and automation differentiate our service offering, which all support our pricing. On the volume front, we've seen notable growth in 2025 in special waste, renewable energy, and recycling. In residential collection, intentional shedding moderated in the Q4, and we continue to drive Operating EBITDA and margin growth. We anticipate steady residential volume improvement as we move through 2026. In closing, I'll close by thanking the entire WM team for their commitment and execution throughout 2025. We're entering 2026 with strong momentum, an optimized operating model, and clear opportunities to continue delivering value to our customers and shareholders.
Pricing continues to be a strength for us, with core price of 6.2% in the Q4, not just because of disciplined execution, but because of our strong customer focus and the consistent value we provide to our customers. Our asset positioning and scale, service reliability, and the investments we've made in technology and automation differentiate our service offering, which all support our pricing. On the volume front, we've seen notable growth in 2025 in special waste, renewable energy, and recycling. In residential collection, intentional shedding moderated in the Q4, and we continue to drive Operating EBITDA and margin growth. We anticipate steady residential volume improvement as we move through 2026. In closing, I'll close by thanking the entire WM team for their commitment and execution throughout 2025. We're entering 2026 with strong momentum, an optimized operating model, and clear opportunities to continue delivering value to our customers and shareholders.
I'll I'll close by thanking the entire WM team for the commitment and execution, throughout 2025 we're entering 2026 with strong momentum and optimized operating model and clear opportunities to continue, delivering value to our customers and shareholders.
Speaker #1: Our asset positioning and scale, service reliability, and the investments we've made in technology and automation differentiate our service offering which all support our pricing.
And now, I'll turn the call over to David to discuss our 2025 Financial results and 2026 Financial Outlook in further detail.
Thanks John and good morning.
Our 2025 performance demonstrates, the meaningful progress. We're making toward our long-term strategic goals.
Speaker #1: And on the volume front, we've seen notable growth in 2025 in special waste, renewable energy, and recycling. In residential collection, intentional shedding, moderated in the fourth quarter, and we continue to drive operating EBITDA and margin growth.
Speaker #1: We anticipate steady growth through 2026. And in closing, I'll thank the entire WM team for their commitment and execution throughout 2025. We're entering 2026 with strong momentum, an optimized operating model, and clear opportunities to continue delivering value to our customers and shareholders.
operating Eva do margin expanded, 40 basis points to 30.1% for the full year which which is a result that overcame 140, basis point margin headwind from the combined impact of the acquisition of the healthcare Solutions business and the expiration of alternative fuel tax credits
This results significantly exceeded the margin Outlook, we provided at the beginning of 2025, as we outperformed, our own high expectations for cost optimization in our Legacy business, and Synergy capture in the healthcare Solutions business.
During each quarter of the year.
Speaker #1: And now I'll turn the call over to David to discuss our 2025 financial results and 2026 financial outlook in further detail.
Edward Egl: Now I'll turn the call over to David to discuss our 2025 financial results and 2026 financial outlook in further detail. Thanks, John, and good morning. Our 2025 performance demonstrates the meaningful progress we're making toward our long-term strategic goals. Operating EBITDA margin expanded 40 basis points to 30.1% for the full year, which is a result that overcame a 140 basis point margin headwind from the combined impact of the acquisition of the healthcare solutions business and the expiration of alternative fuel tax credits. This result significantly exceeded the margin outlook we provided at the beginning of 2025, as we outperformed our own high expectations for cost optimization in our legacy business and synergy capture in the healthcare solutions business during each quarter of the year. Normalized for these known headwinds I just mentioned, our legacy business delivered 180 basis points of margin expansion for the year.
Now I'll turn the call over to David to discuss our 2025 financial results and 2026 financial outlook in further detail.
David Reed: Thanks, John, and good morning. Our 2025 performance demonstrates the meaningful progress we're making toward our long-term strategic goals. Operating EBITDA margin expanded 40 basis points to 30.1% for the full year, which is a result that overcame a 140 basis point margin headwind from the combined impact of the acquisition of the healthcare solutions business and the expiration of alternative fuel tax credits. This result significantly exceeded the margin outlook we provided at the beginning of 2025, as we outperformed our own high expectations for cost optimization in our legacy business and synergy capture in the healthcare solutions business during each quarter of the year. Normalized for these known headwinds I just mentioned, our legacy business delivered 180 basis points of margin expansion for the year.
Speaker #2: Thanks, John, and good morning. Our 2025 performance demonstrates the meaningful progress we're making toward our long-term strategic goals. Operating EBITDA margin expanded 40 basis points, to 30.1% for the full year, which is a result that overcame 140 basis point margin headwind from the combined impact of the acquisition of the healthcare solutions business and the expiration of alternative fuel tax credits.
Normalize for these known headwinds, I just mentioned are Legacy business, delivered 180 basis points of margin expansion for the year.
This was driven by 120 basis points of growth in the collection and Disposal business from the benefits of price cost, optimization and improved business, mix, particularly growth in landfill volumes and the shedding of low margin residential business.
Margin growth was also bolstered by a combined, 60 basis points from lower commodity pricing in the recycling brokerage business.
Speaker #2: This result significantly exceeded the margin outlook we provided at the beginning of 2025. As we outperformed our own high expectations for cost optimization in our legacy business and synergy capture in the healthcare solutions business during each quarter of the year.
recycling automation benefits, the growth of our high margin renewable natural, gas business, and the lower risk management cost
Cost optimization remained a central theme in 2025.
Speaker #2: Normalized for these known headwinds I just mentioned, our legacy business delivered margin expansion for the 180 basis points of year. This was driven by 120 basis points of growth in the collection and disposal business from the benefits of price, cost optimization, and improved business mix, particularly growth in landfill volumes and the shedding of low-margin residential business.
Scna expense for the Legacy business was 9.2% of revenue for the full year, a 10 basis, point Improvement compared to 20224.
as we continue to rationalize discretionary spending,
Edward Egl: This was driven by 120 basis points of growth in the collection and disposal business from the benefits of price, cost optimization, and improved business mix, particularly growth in landfill volumes and the shedding of low-margin residential business. Margin growth was also bolstered by a combined 60 basis points from lower commodity pricing in the recycling brokerage business, recycling automation benefits, the growth of our high-margin renewable natural gas business, and the lower risk management cost. Cost optimization remained a central theme in 2025. SG&A expense for the legacy business was 9.2% of revenue for the full year, a 10 basis point improvement compared to 2024, as we continue to rationalize discretionary spending. Within healthcare solutions, we are making consistent progress in reducing SG&A expenses as we integrate and optimize the business.
This was driven by 120 basis points of growth in the collection and disposal business from the benefits of price, cost optimization, and improved business mix, particularly growth in landfill volumes and the shedding of low-margin residential business. Margin growth was also bolstered by a combined 60 basis points from lower commodity pricing in the recycling brokerage business, recycling automation benefits, the growth of our high-margin renewable natural gas business, and the lower risk management cost. Cost optimization remained a central theme in 2025. SG&A expense for the legacy business was 9.2% of revenue for the full year, a 10 basis point improvement compared to 2024, as we continue to rationalize discretionary spending. Within healthcare solutions, we are making consistent progress in reducing SG&A expenses as we integrate and optimize the business.
Within Healthcare Solutions. We are making consistent progress in reducing sgna expenses as we integrate and optimize the business.
Speaker #2: Margin growth was also bolstered by a combined 60 basis points from lower commodity pricing in the recycling brokerage business, recycling automation benefits, the growth of our high-margin renewable natural gas business, and the lower risk management cost.
Fourth quarter, 2025 Healthcare Solutions. Sgna of 20.8% of Revenue is a notable Improvement of 350 basis, points from the prior year period and a significant step toward our long-term ambition, to get the sgna of this business in line with the rest of the company.
At 10.4% for the full year, it is clear that we are on track to get total company sgna as a percentage of Revenue below 10% in short order.
Speaker #2: Cost optimization remained a central theme in 2025. SG&A expense for the legacy business was 9.2% of revenue for the full year, a 10 basis point improvement compared to 2024.
Our strong execution, translated into robust cash flow generation in 2025.
Cash flow from operations. Grew more than 12% to 6.04 billion.
Speaker #2: As we continue to rationalize discretionary spending, within healthcare solutions, we are making consistent progress in reducing SG&A expenses as we integrate and optimize the business.
In free cash flow, reached 2.94 billion dollars in increase of nearly 27%.
These results showcase our success in driving margin expansion and disciplined approach to capital investment.
Speaker #2: Fourth quarter 2025 healthcare solutions SG&A of 20.8% of revenue is a notable improvement of 350 basis points from the prior year period. And a significant step toward our long-term ambition to get the SG&A of this business in line with the rest of the company.
Edward Egl: Q4 2025 Healthcare Solutions SG&A of 20.8% of revenue is a notable improvement of 350 basis points from the prior year period, and a significant step toward our long-term ambition to get the SG&A of this business in line with the rest of the company. At 10.4% for the full year, it is clear that we are on track to get total company SG&A as a percentage of revenue below 10% in Q4. Our strong execution translated into robust cash flow generation in 2025. Cash flow from operations grew more than 12% to $6.04 billion, and free cash flow reached $2.94 billion, an increase of nearly 27%. These results showcase our success in driving margin expansion and disciplined approach to capital investment. For the year, we spent just under $2.6 billion on capital to support the business and $633 million on sustainability growth investments.
Q4 2025 Healthcare Solutions SG&A of 20.8% of revenue is a notable improvement of 350 basis points from the prior year period, and a significant step toward our long-term ambition to get the SG&A of this business in line with the rest of the company. At 10.4% for the full year, it is clear that we are on track to get total company SG&A as a percentage of revenue below 10% in Q4. Our strong execution translated into robust cash flow generation in 2025. Cash flow from operations grew more than 12% to $6.04 billion, and free cash flow reached $2.94 billion, an increase of nearly 27%. These results showcase our success in driving margin expansion and disciplined approach to capital investment. For the year, we spent just under $2.6 billion on capital to support the business and $633 million on sustainability growth investments.
For the year, we spent just under 2.6 billion dollars on Capital to support the business.
And 633 million on sustainability growth Investments.
In 2025, we allocated 1.3 billion to dividends.
And paid down 1, billion dollars in debt.
Speaker #2: At 10.4% for the full year, it is clear that we are on track to get total company SG&A as a percentage of revenue below 10% in short order.
Reaching a leverage ratio of 3.1 times.
Speaker #2: Our strong execution translated into robust cash flow generation in 2025. Cash flow from operations grew more than 12% to 6.04 billion dollars and free cash flow reached 2.94 billion dollars and increased of nearly 27%.
With ex, we expect to reach a leverage ratio within our targeted range of between 2.5 and 3 times during 2026.
We also invested more than dollars in Tuck and Acquisitions to expand our traditional Solid Waste and Recycling footprint.
Speaker #2: These results showcase our success in driving margin expansion and disciplined approach to capital investment. For the year, we spent just under 2.6 billion dollars on capital to support the business.
We expect operating ibida to be between 8.15 and 8.25 billion dollars in 2026.
Speaker #2: And $633 million on sustainability growth investments. In 2025, we allocated $1.3 billion to dividends and paid down $1 billion in debt.
This projection reflects an update to the classification of accretion expense a change. We are making to enhance the comparability with our industry peers and to better reflect operating performance.
Edward Egl: In 2025, we allocated $1.3 billion to dividends and paid down $1 billion in debt, reaching a leverage ratio of 3.1 times. We expect to reach a leverage ratio within our targeted range of between 2.5 and 3 times during 2026. We also invested more than $400 million in tuck-in acquisitions to expand our traditional solid waste and recycling footprint. Moving to the outlook, we expect Operating EBITDA to be between $8.15 and $8.25 billion in 2026. This projection reflects an update to the classification of Accretion Expense, a change we are making to enhance the comparability with our industry peers and to better reflect operating performance. As a result, our 2026 Operating EBITDA guidance excludes projected Accretion Expense of approximately $150 million. Our plan calls for a typical quarterly cadence of Operating EBITDA contributions across the year.
In 2025, we allocated $1.3 billion to dividends and paid down $1 billion in debt, reaching a leverage ratio of 3.1 times. We expect to reach a leverage ratio within our targeted range of between 2.5 and 3 times during 2026. We also invested more than $400 million in tuck-in acquisitions to expand our traditional solid waste and recycling footprint. Moving to the outlook, we expect Operating EBITDA to be between $8.15 and $8.25 billion in 2026. This projection reflects an update to the classification of Accretion Expense, a change we are making to enhance the comparability with our industry peers and to better reflect operating performance. As a result, our 2026 Operating EBITDA guidance excludes projected Accretion Expense of approximately $150 million. Our plan calls for a typical quarterly cadence of Operating EBITDA contributions across the year.
As a result. Our 2026 operating Eva dog, guidance excludes. Projected accretion expense of approximately 150 million dollars.
Speaker #2: Reaching a leverage ratio of 3.1 times. We expect to reach a leverage ratio within our targeted range of between 2.5 and 3.0 times during 2026.
Our plan calls for a typical quarterly Cadence of operating ibida contributions across the year.
Speaker #2: We also invested more than 400 million dollars in tuck-in acquisitions to expand our traditional solid waste and recycling footprint. Moving to the outlook, we expect operating EBITDA to be between 8.15 and 8.25 billion dollars in 2026.
Additionally, we expect an effective tax rate of approximately 24% and a share count at the end of the year of about 402 million shares.
we anticipate Capital expenditures for 2026 to be between 2.65 and 2.75 billion dollars which is inclusive of about 200 million dollars, directed towards High return sustainability projects,
Speaker #2: This projection reflects an update to the classification of accretion expense, a change we are making to enhance the comparability with our industry peers. And to better reflect operating performance.
Speaker #2: As a result, our 2026 operating EBITDA guidance excludes projected accretion expense of approximately 150 million dollars. Our plan calls for a typical quarterly cadence of operating EBITDA contributions across the year.
Sustainability growth Capital includes spending of about 85 million on 2 recently approved renewable natural gas facilities and 1 New Recycling growth project. Each expected to be completed and to begin contributing operating Haida by 2028.
These projects are attractive opportunities to extend our Network. While bolstering WM industry-leading return on invested capital,
Speaker #2: Additionally, we expect an effective tax rate of approximately 24% and a share count at the end of the year of about 402 million shares.
Edward Egl: Additionally, we expect an effective tax rate of approximately 24% and a share count at the end of the year of about 402 million shares. We anticipate capital expenditures for 2026 to be between $2.65 and $2.75 billion, which is inclusive of about $200 million directed towards high-return sustainability projects. Sustainability growth capital includes spending of about $85 million on two recently approved renewable natural gas facilities and one new recycling growth project, each expected to be completed and to begin contributing Operating EBITDA by 2028. These projects are attractive opportunities to extend our network while bolstering WM's industry-leading return on invested capital. In 2026, we expect free cash flow growth of nearly 30% to $3.8 billion at the midpoint of the outlook, which drives our projected Operating EBITDA to Free Cash Flow conversion above 46%.
Additionally, we expect an effective tax rate of approximately 24% and a share count at the end of the year of about 402 million shares. We anticipate capital expenditures for 2026 to be between $2.65 and $2.75 billion, which is inclusive of about $200 million directed towards high-return sustainability projects. Sustainability growth capital includes spending of about $85 million on two recently approved renewable natural gas facilities and one new recycling growth project, each expected to be completed and to begin contributing Operating EBITDA by 2028. These projects are attractive opportunities to extend our network while bolstering WM's industry-leading return on invested capital. In 2026, we expect free cash flow growth of nearly 30% to $3.8 billion at the midpoint of the outlook, which drives our projected Operating EBITDA to Free Cash Flow conversion above 46%.
in 2026, we expect free cash flow, growth of nearly 30% to 3.8 billion dollars at the midpoint of the Outlook, which drives our projected operating ibaad to free cash, flow conversion above 46%
Speaker #2: We anticipate capital expenditures for 2026 to be between 2.65 and 2.75 billion dollars. Which is inclusive of about 200 million dollars directed towards high return sustainability projects.
Our guidance includes an anticipated benefit from Enix investment, tax credits of about 110 million, which is about a 75 million headwind from the prior year.
Speaker #2: Sustainability growth capital includes spending of about 85 million dollars on two recently approved renewable natural gas facilities and one new recycling growth project. Each expected to be completed and to begin contributing operating EBITDA by 2028.
In closing, 2025 underscored the strength of our business model, the resilience of our operations, and the discipline with which our teams execute every day.
We are proud of our progress toward our long-term, strategic goals.
Speaker #2: These projects are attractive opportunities to extend our network while bolstering WM's industry-leading return on invested capital. In 2026, we expect free cash flow growth of nearly 30% to 3.8 billion dollars at the midpoint of the outlook.
Driving margin expansion. Strong cash flow generation, and continue to optimization across the Enterprise.
I want to thank our dedicated team members whose commitment makes these results possible.
Speaker #2: Which drives our projected operating EBITDA to free cash flow conversion above 46%. Our guidance includes an anticipated benefit from investment tax credits of about 110 million dollars which is about a 75 million dollar headwind from the prior year.
as we look ahead to 2026, we are confident in our ability to sustain this momentum to continue, delivering operational excellence and to generate long-term value, for our shareholders,
With that Livia. Let's open up the lines for questions.
Edward Egl: Our guidance includes an anticipated benefit from investment tax credits of about $110 million, which is about a $75 million headwind from the prior year. In closing, 2025 underscored the strength of our business model, the resilience of our operations, and the discipline with which our teams execute every day. We are proud of our progress toward our long-term strategic goals, driving margin expansion, strong cash flow generation, and continued optimization across the enterprise. I want to thank our dedicated team members whose commitment makes these results possible. As we look ahead to 2026, we are confident in our ability to sustain this momentum, to continue delivering operational excellence, and to generate long-term value for our shareholders. With that, Livia, let's open up the lines for questions.
Our guidance includes an anticipated benefit from investment tax credits of about $110 million, which is about a $75 million headwind from the prior year. In closing, 2025 underscored the strength of our business model, the resilience of our operations, and the discipline with which our teams execute every day. We are proud of our progress toward our long-term strategic goals, driving margin expansion, strong cash flow generation, and continued optimization across the enterprise. I want to thank our dedicated team members whose commitment makes these results possible. As we look ahead to 2026, we are confident in our ability to sustain this momentum, to continue delivering operational excellence, and to generate long-term value for our shareholders. With that, Livia, let's open up the lines for questions.
ladies and gentlemen, as a reminder to ask the question,
1 1 on your
For your name to be announced.
Speaker #2: In closing, 2025 underscored the strength of our business model the resilience of our operations and the discipline with which our teams execute every day.
to withdraw your question, simply press star 11 again please stand by while we compile canvas
now, first question coming from the lineup,
Speaker #2: We are proud of our progress toward our long-term strategic goals driving margin expansion strong cash flow generation and continued optimization across the enterprise. I want to thank our dedicated team members whose commitment makes these results possible.
With RBC Capital markets. Now open,
Speaker #2: As we look ahead to 2026, we are confident in our ability to sustain this momentum to continue delivering operational excellence and to generate long-term value for our shareholders.
Speaker #2: With that, Livia, let's open up the lines for questions.
Speaker #1: Finally, ladies and gentlemen, as a reminder: to ask a question, you will need to press *11 on your telephone and wait for your name to be announced.
Edward Egl: Finally, ladies and gentlemen, as a reminder, to ask the question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 11 again. Please stand by while we compile the Q&A roster. Now, our first question coming from the line of Sabahat Khan with RBC Capital Markets. Your line, it's now open. Great. Thanks, and good morning. Just maybe starting with sort of the top line guidance, can you maybe give us some perspective on the industrial activity has been weak for some time? There's some views just broadly out there that the economy picks up this. So maybe just what you've embedded in terms of the macro backdrop.
Operator: Finally, ladies and gentlemen, as a reminder, to ask the question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 11 again. Please stand by while we compile the Q&A roster. Now, our first question coming from the line of Sabahat Khan with RBC Capital Markets. Your line, it's now open.
Great. Thanks and good morning, just maybe starting with sort of the Top Line guys can you maybe give us some perspective on, you know, the industrial activities in week for some time. Um there's some views just broadly out there that the economy picks up there. So maybe just what you embedded in terms of the, the macro backup. Obviously we see the the sort of the directional volume and pricing commentary but if you can just delve into what you're seeing in some of your local markets and is the industrial C and D type um Market picking up at all. Thanks.
Speaker #1: To withdraw your question, simply press star 11 again. Please stand by while we compile the Q&A roster. Now, first question coming from the lineup.
Regarding kind of the macroeconomy, I would, I would say that we've we've said for the last few quarters that we're cautiously optimistic. And I think that uh we we stay with that. I I might even remove the word cars to say, I think we're optimistic uh about the macroeconomy
Speaker #1: Sabahat Khan, with RBC Capital Markets, your line is now open.
Sabahat Khan: Great. Thanks, and good morning. Just maybe starting with sort of the top line guidance, can you maybe give us some perspective on the industrial activity has been weak for some time? There's some views just broadly out there that the economy picks up this. So maybe just what you've embedded in terms of the macro backdrop.
Speaker #3: Great, thanks and good morning. Just maybe starting with sort of the top line guidance, can you maybe give us some perspective on, you know, the industrial activity has been weak for some time.
When we look at our own internal figures, uh, and you mentioned the industrial line of business, that's a line of business that has been pretty soft over the last couple of years. I think we've been down 3 or 4% in volume. Each of the last probably 7 or 8 quarters.
Speaker #3: There's some views just broadly out there that the economy picks up this year. Maybe just what you've embedded in terms of the macro backdrop.
Speaker #3: Obviously, we see the sort of the directional volume and pricing commentary, but if you can just delve into what you're seeing in some of your local markets and as an industrial CND type market picking up at
Edward Egl: Obviously, we see the sort of the directional volume and pricing commentary, but if you can just delve into what you're seeing in some of your local markets, and is an industrial C&D type market picking up at all. Thanks. Yeah. Good morning. Regarding kind of the macro economy, I would say that we've said for the last few quarters that we're cautiously optimistic, and I think that we stay with that. I might even remove the word cautiously. I think we're optimistic about the macro economy. When we look at our own internal figures, and you mentioned the industrial line of business, that's a line of business that has been pretty soft over the last couple of years. I think we've been down 3% or 4% in volume each of the last probably 7 or 8 quarters. And that business actually has bounced back to almost flat.
Obviously, we see the sort of the directional volume and pricing commentary, but if you can just delve into what you're seeing in some of your local markets, and is an industrial C&D type market picking up at all. Thanks.
And and that business actually has bounced back to to almost flat. So, so that's an encouraging sign for us. I think it is. Similarly, as John mentioned in his remarks about the residential line of business that's been negative for some time that's that's been much more uh By Design.
Speaker #3: all. Thanks. Yeah,
Jim Fish: Yeah. Good morning. Regarding kind of the macro economy, I would say that we've said for the last few quarters that we're cautiously optimistic, and I think that we stay with that. I might even remove the word cautiously. I think we're optimistic about the macro economy. When we look at our own internal figures, and you mentioned the industrial line of business, that's a line of business that has been pretty soft over the last couple of years. I think we've been down 3% or 4% in volume each of the last probably 7 or 8 quarters. And that business actually has bounced back to almost flat.
Speaker #2: good morning. Regarding kind of the macro economy, I would say that we've said for the last few quarters that we're cautiously optimistic and I think that we stay with that.
Speaker #2: I might even remove the word 'cautiously.' I think we're optimistic about the macro economy. When we look at our own internal figures—and you mentioned the industrial line of business—that's a line of business that has been pretty soft over the last couple of years.
But he also mentioned that, that is starting to uh, to come back to more of a normalized number. And and we think by the time we get to kind of the back half, I think John of 2026 will, uh, we should see that uh, down maybe half half or where it is. Yep. So all of those are encouraging signs. Uh, you look at the landfill line of business that's been a, a
Source of strength for us.
Speaker #2: I think we've been down 3 or 4% in volume each of the last probably seven or eight quarters. And that business actually has bounced back to almost flat.
For a number of reasons special ways as John mentioned in his his remarks as well has been good. So, all of that would tell me that the economy is is is uh on on pretty firm footing.
Speaker #2: So that's an encouraging sign for us. I think similarly, as John mentioned in his remarks about the residential line of business, that's been negative for some time.
Edward Egl: So that's an encouraging sign for us. I think similarly, as John mentioned in his remarks about the residential line of business, that's been negative for some time. That's been much more by design. But he also mentioned that that is starting to come back to more of a normalized number. And we think by the time we get to kind of the back half, I think, John, of 2026, we should see that down maybe half of what it was. Yeah, half of where it is. Yeah. So all of those are encouraging signs. You look at the landfill line of business, that's been a source of strength for us for a number of reasons. Special waste, as John mentioned in his remarks as well, has been good. So all of that would tell me that the economy is on pretty firm footing. Great.
So that's an encouraging sign for us. I think similarly, as John mentioned in his remarks about the residential line of business, that's been negative for some time. That's been much more by design. But he also mentioned that that is starting to come back to more of a normalized number. And we think by the time we get to kind of the back half, I think, John, of 2026, we should see that down maybe half of what it was. Yeah, half of where it is. Yeah. So all of those are encouraging signs. You look at the landfill line of business, that's been a source of strength for us for a number of reasons. Special waste, as John mentioned in his remarks as well, has been good. So all of that would tell me that the economy is on pretty firm footing.
Speaker #2: That's been much more by design. But he also mentioned that that is starting to come back to more of a normalized number. And we think by the time we get to kind of the back half, I think John, of of 2026, we should see that down maybe half.
Um, maybe some of the larger initiatives on the cost refinement, getting that percentage more to where you want it to be on the sgna side. So you can delve into some of the commenters shared earlier on the initiatives for this year on the healthcare side. And uh, what could those margins look like sort of over the next 12? 24 months. Thanks
Speaker #3: Yeah, half of where it
Speaker #3: Yes. Yeah. So all of those are—
Speaker #2: encouraging signs. You look at the landfill line of business, that's been a source of strength for us for a number of reasons, special waste, as John mentioned in his remarks as well, has been good.
Speaker #2: So all of that would tell me that the economy is on pretty firm
Speaker #2: footing. Great.
Sabahat Khan: Great.
Speaker #3: And then just a follow-up on the healthcare side a little bit. Can you talk about, it sounds like the integration is largely there, but can you just talk about 426, what you're sort of thinking on the pricing front, maybe some of the larger initiatives on the cost refinement, getting that percentage more to where you want it to be on the SG&A side?
Edward Egl: And then just to follow up on the healthcare side a little bit, can you talk about it sounds like the integration is largely there, but can you just talk about Q4 2026, what you're sort of thinking on the pricing front, maybe some of the larger initiatives on the cost refinement, getting that percentage more to where you want it to be on the SG&A side? So maybe we can delve into some of the commentary shared earlier on the initiatives for this year on the healthcare side and what could those margins look like sort of over the next 12, 24 months. Thanks. Okay. Yeah. So a lot with healthcare solutions. We've made a ton of progress just in the last quarter. There's a lot going on between Q3 and Q4 even.
And then just to follow up on the healthcare side a little bit, can you talk about it sounds like the integration is largely there, but can you just talk about Q4 2026, what you're sort of thinking on the pricing front, maybe some of the larger initiatives on the cost refinement, getting that percentage more to where you want it to be on the SG&A side? So maybe we can delve into some of the commentary shared earlier on the initiatives for this year on the healthcare side and what could those margins look like sort of over the next 12, 24 months. Thanks.
Speaker #3: So maybe we can delve into some of the commentary you shared earlier on the initiatives for this year on the healthcare side and what could those margins look like sort of over the next 12, 24
Speaker #3: months. Thanks. Right.
Jim Fish: Okay. Yeah. So a lot with healthcare solutions. We've made a ton of progress just in the last quarter. There's a lot going on between Q3 and Q4 even.
Speaker #2: Yeah. So a lot with healthcare solutions. We've made a ton of progress just in the last quarter. You know, there's a lot going on between Q3 and Q4 even.
Right. Yeah. So lots uh a lot with Healthcare Solutions. We've made a ton of progress just in the last, uh, in the last quarter. Uh, you know, there's a lot going on between Q3 and Q4, even if you look at 23324, there was, uh, we talked about some lost accounts last quarter. That's that would carry forward into this quarter and carry forward into 2026 and so that did in fact happen. But but as I said in my remarks, we've made a ton of progress on our customer service the customer service side of our business. In fact, the the metrics that you use to, to measure those have actually uh, uh, dropped above our Legacy business, which is very, very encouraging. Uh, similarly from Q3 to Q4. Um, we saw a credit memos, we think they peaked in Q4 and and so that as you know, those credit memos have been used to, to impart uh take care of some of these uh past due accounts that we've had.
I I think what I would say is we've we've really kind of built a wall now between all that is continuing to go on on the back office side of that business and the customer
Speaker #2: If you look at Q3 to Q4, there was, we talked about some lost accounts last quarter that would carry forward into this quarter and carry forward into 2026.
Edward Egl: If you look at Q3 to Q4, we talked about some lost accounts last quarter that would carry forward into this quarter and carry forward into 2026. And so that did, in fact, happen. But as I said in my remarks, we've made a ton of progress on our customer service, the customer service side of our business. In fact, the metrics that you used to measure those have actually jumped above our legacy business, which is very, very encouraging. Similarly, from Q3 to Q4, we saw credit memos. We think they peaked in Q4. And so as you know, those credit memos have been used to, in part, take care of some of these past due accounts that we've had.
If you look at Q3 to Q4, we talked about some lost accounts last quarter that would carry forward into this quarter and carry forward into 2026. And so that did, in fact, happen. But as I said in my remarks, we've made a ton of progress on our customer service, the customer service side of our business. In fact, the metrics that you used to measure those have actually jumped above our legacy business, which is very, very encouraging. Similarly, from Q3 to Q4, we saw credit memos. We think they peaked in Q4. And so as you know, those credit memos have been used to, in part, take care of some of these past due accounts that we've had.
Speaker #2: And so that did in fact happen, but as I said in my remarks, we've made a ton of progress on our customer service the customer service side of our business.
Speaker #2: In fact, the metrics that you used to measure those have actually jumped above our legacy business, which is very, very encouraging. Similarly, from Q3 to Q4, we saw credit memos.
Speaker #2: We think they peaked in Q4 and so as you know, those credit memos have been used to, in part, take care of some of had.
Speaker #2: I think what I would say these past-due accounts that we've is we've really kind of built a wall now between all that is continuing to go on on the back office side of that business and the customer themselves.
Edward Egl: I think what I would say is we've really kind of built a wall now between all that is continuing to go on on the back office side of that business and the customer themselves. And that's a real positive. And the result of that, as we think about 2026, is going to be, I think, better price realization. We've been getting price all along, but we just haven't realized as much of it. And a lot of that has been these credit memos that we've been giving that has offset some of that price. I think when you get into 2026, we're expecting 4.2% price in 2026. Top line is going to be 3%, and that is a reflection of those lost accounts that will anniversary, for the most part, in the back half of 2026.
I think what I would say is we've really kind of built a wall now between all that is continuing to go on on the back office side of that business and the customer themselves. And that's a real positive. And the result of that, as we think about 2026, is going to be, I think, better price realization. We've been getting price all along, but we just haven't realized as much of it. And a lot of that has been these credit memos that we've been giving that has offset some of that price. I think when you get into 2026, we're expecting 4.2% price in 2026. Top line is going to be 3%, and that is a reflection of those lost accounts that will anniversary, for the most part, in the back half of 2026.
Speaker #2: And that's a real positive. And the result of that, as we think about 2026, is going to be, I think, better price realization. We've been getting price all along, but we just haven't realized as much of it.
Uh, themselves and, and, and that's a real positive. And the result of that as we think about 2026 is going to be, uh, I think, uh, Better Price realization we've been getting price all along, but we just haven't realized as much of it. And a lot of that has been these credit memos that we've been giving that has offset some of that price. I think, when you get into 2026, we're expecting 4.2% price in 2026. Top Line is going to be 3%. And that's, that is a reflection of those, of those lost accounts that will that will anniversary for the most part in the back, half of 26. So, that's the reason why it looks like all of our growth is coming from price. It is, in fact coming from price and it's, and it's due to those lost accounts. Uh, and then when you think about, uh, the expense side of the business, John mentioned that we've, that we've rolled that in and I think Ralph, the last quarter talked about how we've rolled, uh, that business into our areas. And so we're seeing the, the real benefits of that. Um, we're seeing that that, uh, what we've honed in
Speaker #2: And a lot of that has been these credit memos that we've been giving that has offset some of that price. I think when you get into 2026, we're expecting 4.2% price in 2026.
Speaker #2: Top line is going to be 3%, and that is a reflection of those lost accounts that will anniversary for the most part in the back half of '26.
On the Legacy business over the last, probably 10 years. Some of it through technology, some of it through process, all of that gets brought to this routing Logistics business which is W Healthcare Solutions. So we're really encouraged about uh what we're seeing is we roll the business into the areas, I guess. The last thing I'll mention here is that
Speaker #2: So that's the reason why it looks like all of our growth is coming from price. It is, in fact, coming from price. And it's due to those lost accounts.
Edward Egl: So that's the reason why it looks like all of our growth is coming from price. It is, in fact, coming from price, and it's due to those lost accounts. And then when you think about the expense side of the business, John mentioned that we've rolled that in, and I think Roth, the last quarter, talked about how we've rolled that business into our areas. And so we're seeing the real benefits of that. We're seeing that what we've honed on the legacy business over the last probably 10 years, some of it through technology, some of it through process, all of that gets brought to this routing and logistics business, which is WM Healthcare Solutions. So we're really encouraged about what we're seeing as we roll the business into the areas.
So that's the reason why it looks like all of our growth is coming from price. It is, in fact, coming from price, and it's due to those lost accounts. And then when you think about the expense side of the business, John mentioned that we've rolled that in, and I think Roth, the last quarter, talked about how we've rolled that business into our areas. And so we're seeing the real benefits of that. We're seeing that what we've honed on the legacy business over the last probably 10 years, some of it through technology, some of it through process, all of that gets brought to this routing and logistics business, which is WM Healthcare Solutions. So we're really encouraged about what we're seeing as we roll the business into the areas.
Speaker #2: And then when you think about the expense side of the business, John mentioned that we've rolled that in, and I think Roth the last quarter talked about how we've rolled that business into our areas.
Cross selling which we we put 50 million across selling in the IBA. Synergy number um back in June of last year and I would tell you that if I were a betting man that I would take the over on that. Um because in talking to our area leaders last week,
Uh almost to a person they were very uh encouraged by what they're seeing from their sales folks.
Speaker #2: And so we're seeing that the real benefits of that, we're seeing that what we've honed on the legacy business over the last probably 10 years, some of it through technology, some of it through process, all of that gets brought to this routing logistics business, which is WM Healthcare Solutions.
Uh, in terms of cross-selling, I think it's important to keep in mind that that some of that cross selling benefit though does show up in the collection and disposal of business. Uh, not all of it shows up necessarily in the healthcare Solutions, business.
Great. Thanks very much. I'll pass the line.
Speaker #2: So we're really encouraged about what we're seeing as we roll the business into the areas. I guess the last thing I'll mention here is that cross-selling, which we put 50 million in cross-selling in the EBITDA synergy number back in June of last year.
Question coming from the lineup. Brian Berkeley. I am with City Yin is now open.
Morning, thank you.
For taking the question.
Edward Egl: I guess the last thing I'll mention here is that cross-selling, which we put $50 million in cross-selling in the EBITDA synergy number back in June of last year. I would tell you that if I were a betting man, that I would take the over on that because in talking to our area leaders last week, almost to a person, they were very encouraged by what they're seeing from their sales folks in terms of cross-selling. I think it's important to keep in mind that some of that cross-selling benefit, though, does show up in the collection and disposal line of business. Not all of it shows up necessarily in the healthcare solutions business. Great. Thanks very much. I'll pass the line. All right. Thank you. Our next question coming from the line of Brian Burkmeyer with Citi. Your line is now open. Hi. Good morning.
I guess the last thing I'll mention here is that cross-selling, which we put $50 million in cross-selling in the EBITDA synergy number back in June of last year. I would tell you that if I were a betting man, that I would take the over on that because in talking to our area leaders last week, almost to a person, they were very encouraged by what they're seeing from their sales folks in terms of cross-selling. I think it's important to keep in mind that some of that cross-selling benefit, though, does show up in the collection and disposal line of business. Not all of it shows up necessarily in the healthcare solutions business.
Appreciate all the detail.
Speaker #2: And I would tell you that if I were a betting man, that I would take the over on that because in talking to our area leaders last week, almost to a person, they were very encouraged by what they're seeing from their sales folks.
Speaker #2: In terms of cross-selling, I think it's important to keep in mind that some of that cross-selling benefit, though, does show up in the collection and disposal line of business, not all of it shows up necessarily in the healthcare solutions
You're really helpful. Um I I I thought that, you know, footnote H seemed to say that that maybe discussion on the 2027 Financial targets would be put on hold for a little while. I'm not sure if I'm sort of interpreting that correctly and you know if if I am um you know, maybe from a high level can you help us understand sort of what went into that decision? Um, I I guess there have been sort of some accounting changes it. It's pretty Dynamic macro environment. But just kind of uh
You know, hearing it in your own words would be really helpful.
Speaker #2: business. Great.
Sabahat Khan: Great. Thanks very much. I'll pass the line.
Speaker #3: Thanks very much. I'll pass the line.
Jim Fish: All right.
Speaker #2: All
Speaker #2: right. Thank you.
Operator: Thank you. Our next question coming from the line of Brian Burkmeyer with Citi. Your line is now open.
Speaker #4: Our next question coming from the lineup. Brian Berkeley with Citi, you'll let us now
Speaker #4: open. Hi, good morning.
Brian Burkmeyer: Hi. Good morning.
Speaker #5: Thank you for taking the questions. I appreciate all the detail in the press release. It's really helpful. I thought that footnote H seemed to say that maybe discussion on the 2027 financial targets would be put on hold for a little while.
Edward Egl: Thank you for taking the questions. I appreciate all the detail in the press release. You're really helpful. I thought that footnote H seemed to say that maybe discussion on the 2027 financial targets would be put on hold for a little while. I'm not sure if I'm sort of interpreting that correctly. And if I am, maybe from a high level, can you help us understand sort of what went into that decision? I guess there have been sort of some accounting changes. It's a pretty dynamic macro environment, but just kind of hearing it in your own words would be really helpful. We did debate, Tony, whether we would get a question on footnote H. So Heather's the winner on this one. But here's what I would say about the 2027 number. On investor day, we gave some high-level estimates.
Thank you for taking the questions. I appreciate all the detail in the press release. You're really helpful. I thought that footnote H seemed to say that maybe discussion on the 2027 financial targets would be put on hold for a little while. I'm not sure if I'm sort of interpreting that correctly. And if I am, maybe from a high level, can you help us understand sort of what went into that decision? I guess there have been sort of some accounting changes. It's a pretty dynamic macro environment, but just kind of hearing it in your own words would be really helpful.
Speaker #5: I'm not sure if I'm sort of interpreting that correctly. And if I am, maybe from a high level, can you help us understand sort of what went into that decision?
Speaker #5: I guess there have been sort of some accounting changes. It's a pretty dynamic macro environment, but just kind of hearing it in your own words would be really helpful.
Jim Fish: We did debate, Tony, whether we would get a question on footnote H. So Heather's the winner on this one. But here's what I would say about the 2027 number. On investor day, we gave some high-level estimates.
Speaker #2: We did debate, Tony, whether we would get a question on footnote H, so Heather's the winner on this one. But here's what I would say about the 2027 number.
But um, but I will tell you this uh about 27, we don't see anything on the horizon that's concerning for us.
Speaker #2: On Investor Day, we gave some high-level estimates. What I would say about those is that they weren't detailed guidance as we're giving today for 2026.
And uh I would also say that, you know, if there's if there's 1 thing, you know about us over the last, you know, number of years,
Edward Egl: What I would say about those is that they weren't detailed guidance as we're giving today for 2026, and we will give detailed guidance on 2027 a year from now. So I would tell you that those were estimates. They're kind of the best estimates we could make at the time. I mean, our business typically, about as far out as we can look, is 12 months. It's hard to look at things like commodity prices 18 to 24 months out. So those estimates, I wouldn't rely on those as guidance. I would rely on them as what they were intended, which is estimates. But I will tell you this about 2027, we don't see anything on the horizon that's concerning for us.
What I would say about those is that they weren't detailed guidance as we're giving today for 2026, and we will give detailed guidance on 2027 a year from now. So I would tell you that those were estimates. They're kind of the best estimates we could make at the time. I mean, our business typically, about as far out as we can look, is 12 months. It's hard to look at things like commodity prices 18 to 24 months out. So those estimates, I wouldn't rely on those as guidance. I would rely on them as what they were intended, which is estimates. But I will tell you this about 2027, we don't see anything on the horizon that's concerning for us.
the consistency of our performance has been 1 of our strong, strong suits, and and I think that continues uh, going forward
Speaker #2: And we will give detailed guidance on 2027 a year from now. So I would tell you that those were estimates that are kind of the best estimates we could make at the time.
Speaker #2: I mean, our business typically about as far out as we can look is 12 months. It's hard to look at things like commodity prices 18 to 24 months out.
Speaker #2: So those estimates, I wouldn't rely on those as guidance. I would rely on them as what they were intended, which is estimates. But I will tell you this, about '27, we don't see anything on the horizon that's concerning for us.
Speaker #2: And I would also say that if there's one thing you know about us over the last number of years, the consistency of our performance has been one of our strong suits.
Edward Egl: And I would also say that if there's one thing you know about us over the last number of years, the consistency of our performance has been one of our strong suits, and I think that continues going forward. Got it. Got it. Thanks. Thanks for that. It's really helpful. And then maybe just digging into the guidance for 2026 a little bit more. Maybe John, can you give us an idea of maybe the level of margin expansion that you're looking for in collection and disposal this year on sort of an apples-to-apples basis? I guess it's kind of noisy with the landfill accretion and the wildfire comps, but your thoughts on net price and maybe some key cost buckets could be quite helpful. Thank you. I'll turn it over.
And I would also say that if there's one thing you know about us over the last number of years, the consistency of our performance has been one of our strong suits, and I think that continues going forward.
Speaker #2: And I think that continues going forward.
Brian Burkmeyer: Got it. Got it. Thanks. Thanks for that. It's really helpful. And then maybe just digging into the guidance for 2026 a little bit more. Maybe John, can you give us an idea of maybe the level of margin expansion that you're looking for in collection and disposal this year on sort of an apples-to-apples basis? I guess it's kind of noisy with the landfill accretion and the wildfire comps, but your thoughts on net price and maybe some key cost buckets could be quite helpful. Thank you. I'll turn it over.
Speaker #5: Got it. Got it. Thanks for that. It's really helpful. And then maybe just digging into the guidance for '26 a little bit more. Maybe John, can you give us an idea of maybe the level of margin expansion that you're looking for in collection and disposal this year on sort of an apples-to-apples basis?
Got it, got it. Thanks, thanks for that. Um, it's really helpful. And then, you know, maybe just uh, digging into the guidance for for 26 a little bit more. Um, you know, maybe John can can you give us an idea of maybe the level of margin expansion that you're looking for in collection and Disposal this year and sort of an Apples to Apples basis? I guess it's kind of noisy with the landfill accretion and the Wildfire comps. But, you know, your thoughts on, you know, net price and maybe some key cost, buckets could be quite helpful. Thank you, I'll turn it over. Yeah, Brian. You saw the, the guidance we gave in terms of yield and core price and what, we've really been focused on was really showing up well in Q4 and this year as I mentioned over my prepared remarks, this is sort of the is the spread between between price um and cost and we're continuing to expand margins. So we're really pleased directly to your question. There is a little bit of noise in there. We talked about the the wildfires being 1 of those things that really showed up in Q2 but 50 basis points on the same store sales basis is kind of what we're what we're targeting from a from a margin Improvement standpoint across the portfolio.
Don't grab me down by calling you the wrong name. I think I called you Tony. So
Thanks, Brian for your question.
Speaker #5: I guess it's kind of noisy with the landfill accretion and the wildfire comps, but your thoughts on net price and maybe some key cost buckets could be quite helpful.
Thank you. Our next question. Coming from the lineup Trevor Romeo with William Blair your line is now open.
Speaker #5: Thank you, I'll turn it over.
Speaker #2: Yeah, Brian, you saw the guidance we gave in terms of yield and core price. And what we've really been focused on was really showing up well in Q4 and this year, as I mentioned in my preparative marks, is sort of the spread between price and cost.
Edward Egl: Yeah, Brian, you saw the guidance we gave in terms of yield and core price, and what we've really been focused on and was really showing up well in Q4 and this year, as I mentioned in my preparatory remarks, is sort of the spread between price and cost, and we're continuing to expand margins, so we're really pleased. Directly to your question, there is a little bit of noise in there. We talked about the wildfires being one of those things that really showed up in Q2, but 50 basis points on a same-store sales basis is kind of what we're targeting from a margin improvement standpoint across the portfolio. Don't grade me down by calling you the wrong name. I think I called you Tony. Thanks, Brian, for your question. Thank you. And our next question coming from the line of Trevor Romeo with William Blair.
John Morris: Yeah, Brian, you saw the guidance we gave in terms of yield and core price, and what we've really been focused on and was really showing up well in Q4 and this year, as I mentioned in my preparatory remarks, is sort of the spread between price and cost, and we're continuing to expand margins, so we're really pleased. Directly to your question, there is a little bit of noise in there. We talked about the wildfires being one of those things that really showed up in Q2, but 50 basis points on a same-store sales basis is kind of what we're targeting from a margin improvement standpoint across the portfolio.
Speaker #2: And we're continuing to expand margins. So we're really pleased. Directly to your question, there is a little bit of noise in there. We talked about the wildfires being one of those things that really showed up in Q2, but 50 basis points on the same store sales basis is kind of what we're targeting from a margin improvement standpoint across the
Speaker #2: portfolio. Don't grade me down by calling you the wrong name.
Jim Fish: Don't grade me down by calling you the wrong name. I think I called you Tony. Thanks, Brian, for your question.
Speaker #6: I think I called you Tony.
Morning, thank you for, uh, for taking the questions. First 1. I had was maybe on the uh, the 2026 outlook for healthcare Solutions, particularly on ebit because I know you did get kind of a revenue Outlook. Um, you talked about kind of, you know, continuing to optimize the business. So I was hoping maybe you could level set. How much cost Synergy capture you realize in 2025 and then how much is baked in for incremental in 2026 and then along with that how much sort of underlying uh you know growth in the margin expansion? You'd expect from the business X energy. Yeah. I it's probably a couple of us. Could take this 1 but
Speaker #2: Thanks, Brian, for your
Speaker #2: Thanks, Brian, for your question. Thank
Operator: Thank you. And our next question coming from the line of Trevor Romeo with William Blair.
Speaker #4: you. And our next question coming from the lineup, Trevor Romeo with Will & Blair, you'll let us
Edward Egl: line is now open. Good morning. Thank you for taking the questions. First one I had was maybe on the 2026 outlook for healthcare solutions, particularly on EBITDA, because I know you did give kind of a revenue outlook. You talked about kind of continuing to optimize the business. So I was hoping maybe you could level set how much cost synergy capture you realized in 2025, and then how much is baked in for incremental in 2026, and then along with that, how much sort of underlying growth and margin expansion you'd expect from the business ex synergies. Yeah. There's probably a couple of us could take this one, but I'll start, and then maybe David or John can jump in.
line is now open.
Speaker #4: now open. Good
Trevor Romeo: Good morning. Thank you for taking the questions. First one I had was maybe on the 2026 outlook for healthcare solutions, particularly on EBITDA, because I know you did give kind of a revenue outlook. You talked about kind of continuing to optimize the business. So I was hoping maybe you could level set how much cost synergy capture you realized in 2025, and then how much is baked in for incremental in 2026, and then along with that, how much sort of underlying growth and margin expansion you'd expect from the business ex synergies.
Speaker #7: morning. Thank you for taking the questions. The first one I had was maybe on the 2026 outlook for healthcare solutions, particularly on EBITDA, because I know you did give kind of a revenue outlook you talked about kind of continuing to optimize the business.
I'll start and then maybe David and John can jump in. But uh, first of all, as far as 25 goes, we did say at least on the sgna synergies, we gave a range initially of of 80 to 100, and and we finished above the top end of that. So we're encouraged by that. And and that ends up being a, a benefit to carryover benefits for us. Some of it is, you know, well, it all carries over, but some of its uh, happened rapidly throughout 2025, so that ends up being a carryover benefit for us as we come into 2026.
Speaker #7: So I was hoping maybe you could level set how much cost synergy capture you realized in 2025, and then how much is baked in for incremental in 2026.
Speaker #7: And then along with that, how much sort of underlying growth and margin expansion you expect from the business X synergies.
Jim Fish: Yeah. There's probably a couple of us could take this one, but I'll start, and then maybe David or John can jump in.
Speaker #2: Yeah, there's probably a couple of us could take this one, but I'll start and then maybe David or John can jump in. But first of all, as far as '25 goes, we did say at least on the SG&A synergies we gave a range initially of 80 to 100.
Edward Egl: But first of all, as far as 2025 goes, we did say, at least on the SG&A synergies, we gave a range initially of 80 to 100, and we finished above the top end of that. So we're encouraged by that, and that ends up being a benefit, a carryover benefit for us. Some of it is, well, it all carries over, but some of it's happened radically throughout 2025. So that ends up being a carryover benefit for us as we come into 2026. The original synergy goal of 300, and that, of course, mentioned the 50 that's included in that for cross-selling, we feel very comfortable with that. I think there's a little bit of a scrambled egg happening here with these businesses because some of this, and I mentioned in cross-selling, some of that ends up showing up in collection and disposal.
But first of all, as far as 2025 goes, we did say, at least on the SG&A synergies, we gave a range initially of 80 to 100, and we finished above the top end of that. So we're encouraged by that, and that ends up being a benefit, a carryover benefit for us. Some of it is, well, it all carries over, but some of it's happened radically throughout 2025. So that ends up being a carryover benefit for us as we come into 2026. The original synergy goal of 300, and that, of course, mentioned the 50 that's included in that for cross-selling, we feel very comfortable with that. I think there's a little bit of a scrambled egg happening here with these businesses because some of this, and I mentioned in cross-selling, some of that ends up showing up in collection and disposal.
Speaker #2: And we finished above the top end of that. So we're encouraged by that. And that ends up being a benefit, a carryover benefit for us.
Speaker #2: Some of it is, well, it all carries over, but some of it happened radically throughout 2025. So that ends up being a carryover benefit for us as we come into 2026.
We the, the original Synergy goal of 300 and that, of course, mentioned, uh, the 50 that's included in that for cross-selling. Uh, we feel very comfortable with that. I I think there's a little bit of a scrambled egg Happening Here with these businesses because some of this and I mentioned in cross-selling, some of that ends up showing up in collection and Disposal the same thing happens on the cost side, uh, you know, particularly operating cost but also sgna. I I I will say this about sgna which is is kind of the the kind of the long pole in the tent here. Um, that David mentioned it in in his remarks but um, as you look at sgna pre-acquisition and that's been something that you know, Deen and I spent a ton of time on all of us but deina and I in particular have a very focused on getting scna down and that number pre-acquisition had gotten down to I think the third quarter of last year was or of 2024 was 8.9%.
Speaker #2: The original synergy goal of 300 and that, of course, mentioned the 50 that's included in that for cross-selling. We feel very comfortable with that.
Speaker #2: I think there's a little bit of a scrambled egg happening here with these businesses, because some of this— and I mentioned in cross-selling—some of that ends up showing up in collection and disposal.
Speaker #2: The same thing happens on the cost side—particularly operating cost, but also SG&A. I will say this about SG&A, which is kind of the long pole in the tent here.
Edward Egl: The same thing happens on the cost side, particularly operating cost, but also SG&A. I will say this about SG&A, which is kind of the long pole in the tent here, that David mentioned it in his remarks, but as you look at SG&A pre-acquisition, and that's been something that Davina and I spent a ton of time on all of us, but Davina and I in particular were very focused on getting SG&A down. And that number pre-acquisition had gotten down to, I think the third quarter of last year was, or of 2024, was 8.9%. And for a year, I believe 2024 was 9.4%. And then that jumped up after the acquisition to a high of 11% in Q1 of last year, of 2025. We have, through this synergy capture, really kind of chopped away at that.
The same thing happens on the cost side, particularly operating cost, but also SG&A. I will say this about SG&A, which is kind of the long pole in the tent here, that David mentioned it in his remarks, but as you look at SG&A pre-acquisition, and that's been something that Davina and I spent a ton of time on all of us, but Davina and I in particular were very focused on getting SG&A down. And that number pre-acquisition had gotten down to, I think the third quarter of last year was, or of 2024, was 8.9%. And for a year, I believe 2024 was 9.4%. And then that jumped up after the acquisition to a high of 11% in Q1 of last year, of 2025. We have, through this synergy capture, really kind of chopped away at that.
Speaker #2: That David mentioned it in his remarks, but as you look at SG&A pre-acquisition, and that's been something that Davina and I spent a ton of time on, all of us, but Davina and I in particular were very focused on getting SG&A down.
And um, as a for a year, I believe 2024 was 9.4%, and then that jumped up after the acquisition to a high of 11% in q1 of last year of 2025, we have, uh, through this Synergy capture have really kind of chopped away at that, it ended the year at, I believe 10.3%. But as David said, there's a, there's a near-term pathway to getting that continuing to get that thing down as a as a corporation that includes Healthcare Solutions down to below 10%.
Speaker #2: And that number, pre-acquisition, had gotten down to, I think, the third quarter of last year was, or of 2024, was 8.9%. And as for a year, I believe 2024 was 9.4%.
Speaker #2: And then that jumped up after the acquisition to a high of 11% in Q1 of last year of 2025. We have through this synergy capture have really kind of chopped away at that.
Speaker #2: It ended the year at, I believe, 10.3%, but as David said, there's a near-term pathway to getting that—continuing to get that thing down as a corporation.
Edward Egl: It ended the year at, I believe, 10.3%. But as David said, there's a near-term pathway to getting that continuing to get that thing down as a corporation. That includes healthcare solutions down to below 10%. And as we've said many times, that business was running at a much higher SG&A. I think it was as high as 25% when we bought it. It has come down to 20%. I think the number that was in our synergy capture was 17%. And then Davina said a number of times, "Look, we think that there's no reason we couldn't expect that number to be down close to our own number, which is kind of 9%." And as it gets down there, you could expect to see that SG&A number continue to come down. And then maybe, John, on the operating side? Yeah.
It ended the year at, I believe, 10.3%. But as David said, there's a near-term pathway to getting that continuing to get that thing down as a corporation. That includes healthcare solutions down to below 10%. And as we've said many times, that business was running at a much higher SG&A. I think it was as high as 25% when we bought it. It has come down to 20%. I think the number that was in our synergy capture was 17%. And then Davina said a number of times, "Look, we think that there's no reason we couldn't expect that number to be down close to our own number, which is kind of 9%." And as it gets down there, you could expect to see that SG&A number continue to come down. And then maybe, John, on the operating side?
Speaker #2: That includes healthcare solutions, down to below 10%. And as we've said many times, that business was running at a much higher SG&A. I think it was as high as 25% when we bought it.
Speaker #2: It has come down to 20. I think the number that was in our synergy capture was 17. And then Devina said a number of times, 'Look, we think that there's no reason we couldn't expect that number to be down close to our own number,' which is kind of 9%.
News are going very well. And, as Jim mentioned, uh, Trevor, we're seeing a good bit of the benefit right now showing up sort of in the core Solid Waste business. I commented on our rollout. Volume last quarter being, uh, a portion of it about 60 basis points, being driven by simply taking that work and putting on WM trucks. That's not something that's going to show per se in the healthcare segment. And like I said, in terms of internalization and other synergies, we're getting out of the business. That's all. All going, extremely well.
Speaker #2: And as it gets down there, you can could expect to see that SG&A number continue to come down. And then maybe John, on the operating
Speaker #2: side? Yeah, I would say from
John Morris: Yeah.
Edward Egl: I would say from a synergy perspective, cross-selling and internalization, those avenues are going very well. And as Jim mentioned, Trevor, we're seeing a good bit of the benefit right now showing up sort of in the core solid waste business. I commented on our rollout volume last quarter being a portion of it, about 60 basis points, being driven by simply taking that work and putting on WM trucks. That's not something that's going to show per se in the healthcare segment. And like I said, in terms of internalization and other synergies we're getting out of the business, that's all going extremely well. Yep. Makes sense. Okay. Thank you both for that. And then I did want to follow up on the R&G business. I don't know if maybe Terry's on the call, but I appreciate the, I guess, the 60% of volumes contracted for 2026. That's encouraging.
I would say from a synergy perspective, cross-selling and internalization, those avenues are going very well. And as Jim mentioned, Trevor, we're seeing a good bit of the benefit right now showing up sort of in the core solid waste business. I commented on our rollout volume last quarter being a portion of it, about 60 basis points, being driven by simply taking that work and putting on WM trucks. That's not something that's going to show per se in the healthcare segment. And like I said, in terms of internalization and other synergies we're getting out of the business, that's all going extremely well.
Speaker #3: a synergy perspective, cross-selling and internalization, those avenues are going very well. And as Jim mentioned, Trevor, we're seeing a good bit of the benefit right now showing up sort of in the core solid waste business.
Speaker #3: I commented on our rollout volume last quarter being a portion of it, about 60 basis points, being driven by simply taking that work and putting it on WM trucks.
Yep. Makes sense. Okay, thank you, both for that. And then I did want to follow up on the um, the RNG business. I don't know. Maybe tears on the call but, uh, appreciate the, I guess the 60% of volumes contracted for 2026. That's encouraging for the 40% of the uncontracted volumes. I think the comment in the press release was an expectation for 24.50 for mmbtu on the pricing side. I think if you use today's spot prices that would imply something, you know, sign, you know, decent amount higher than that. Let's say, so maybe you could just talk about that. A bit is, is that kind of where you see the voluntary market right now, or is there some conservatism built in there or just thoughts on on that pricing?
Speaker #3: That's not something that's going to show per se in the healthcare segment. And like I said, in terms of internalization and other synergies, we're getting out of the business.
Yeah, so I'm here and uh we're really pleased with the progress that we've made on.
Speaker #3: That's all going extremely
Speaker #3: well. Yeah, makes sense.
Trevor Romeo: Yep. Makes sense. Okay. Thank you both for that. And then I did want to follow up on the R&G business. I don't know if maybe Terry's on the call, but I appreciate the, I guess, the 60% of volumes contracted for 2026. That's encouraging.
Speaker #7: Okay, thank you both for that. And then I did want to follow up on the R&G business. I don't know if maybe Terra's on the call, but I appreciate the, I guess, the 60% of volumes contracted for 2026.
Selling a portion of our volume of pretty significant portion and it's a testament to how we've been managing the risk that's in this business.
Speaker #7: That's encouraging. For the 40% of the uncontracted volumes, I think the comment in the press release was an expectation for 2450 per MMBTU on the pricing side.
Edward Egl: For the 40% of the uncontracted volumes, I think the comment in the press release was an expectation for $24.50 per MMBtu on the pricing side. I think if you use today's spot prices, that would imply something a decent amount higher than that, let's say. So maybe you could just talk about that a bit. Is that kind of where you see the voluntary market right now, or is there some conservatism built in there, or just thoughts on pricing? Yeah. So I'm here, and we're really pleased with the progress that we've made on selling a portion of our volume, a pretty significant portion, and it's a testament to how we've been managing the risk that's in this business.
For the 40% of the uncontracted volumes, I think the comment in the press release was an expectation for $24.50 per MMBtu on the pricing side. I think if you use today's spot prices, that would imply something a decent amount higher than that, let's say. So maybe you could just talk about that a bit. Is that kind of where you see the voluntary market right now, or is there some conservatism built in there, or just thoughts on pricing?
Speaker #7: I think if you use today's spot prices, that would imply something a decent amount higher than that, let's say. So maybe you could just talk about that a bit.
Speaker #7: Is that kind of where you see the voluntary market right now, or is there some conservatism built in there, or just thoughts on pricing?
On the 40% that remains unsold, this is going to be the first year. If you look at it our volume is doubling year-over-year from um about 40 million, 40 million MMB to use to now um 21 to 22 plus. So we're going to have a portion that is not allocated to our Fleet, that'll be sold in the voluntary market and that's what you're seeing in there from Ren pricing perspective. We're anticipating Ren pricing to Hold Steady in that 230 to 240 range.
Tara Hemmer: Yeah. So I'm here, and we're really pleased with the progress that we've made on selling a portion of our volume, a pretty significant portion, and it's a testament to how we've been managing the risk that's in this business.
So that's what it's all based on.
Speaker #8: Yeah, so I'm here and we're really pleased with the progress that we've made on selling a portion of our volume, a pretty significant portion, and it's a testament to how we've been managing the risk that's in this business.
Okay, very helpful there. Thank you.
The next question, coming from the line of Tyler Brown with Raymond James, your line is now open.
Hey, good morning.
Speaker #8: On the 40% that remains unsold, this is going to be the first year—if you look at it—our volume is doubling year over year, from about 40 million MMBtus to now 21 to 22 million plus.
Edward Egl: On the 40% that remains unsold, this is going to be the first year, if you look at it, our volume is doubling year-over-year from about 40 million MMBtu to now 21 to 22 plus. So we're going to have a portion that is not allocated to our fleet that'll be sold in the voluntary market, and that's what you're seeing in there. From RIN pricing perspective, we're anticipating RIN pricing to hold steady in that 230 to 240 range. So that's what it's all based on. Okay. Very helpful, Terry. Thank you. Thank you. Our next question coming from the line of Tyler Brown with Raymond James. Your line is now open. Hey. Good morning. Hi, Tom. Good morning. Hey. I'll reiterate. Lots of good detail was in the release.
On the 40% that remains unsold, this is going to be the first year, if you look at it, our volume is doubling year-over-year from about 40 million MMBtu to now 21 to 22 plus. So we're going to have a portion that is not allocated to our fleet that'll be sold in the voluntary market, and that's what you're seeing in there. From RIN pricing perspective, we're anticipating RIN pricing to hold steady in that 230 to 240 range. So that's what it's all based on.
Speaker #8: So we're going to have a portion that is not allocated to our fleet. That'll be sold in the voluntary market. And that's what you're seeing in there from RIN pricing perspective.
Hey, uh, I'll reiterate lots of good detail. Uh, was in the release, but David or Tara. I just wanted to unpack the comments about the approaching 1 billion in sustainability Ava by 27. So I think in the release you provided a baseline now. So I think that Baseline is 300 million and I just want to make sure that I have it right. But are you basically expecting the Investments to yield call it slightly less than
Speaker #8: We're anticipating RIN pricing to hold steady in that 230 to 240 range. So that's what it's all based on.
Trevor Romeo: Okay. Very helpful, Terry. Thank you.
Speaker #7: Okay, very helpful, Terra. Thank you.
Operator: Thank you. Our next question coming from the line of Tyler Brown with Raymond James. Your line is now open.
Speaker #1: Thank you. Our next question coming from the lineup. Tyler Brown with Raymond James, Ulanis Melvin.
700 million of incremental ebida over the time frame. And can we comp that to the 760, to 800 that you laid out at the analyst day? And if so can we just talk about what's driving that Delta
Tyler Brown: Hey. Good morning. Hi, Tom. Good morning. Hey. I'll reiterate. Lots of good detail was in the release.
So, you're you absolutely have the parts, right? And let me just take a step back on 2 key points.
Speaker #2: Hi, Hey, good morning.
Speaker #2: Tyler. Good morning.
Speaker #9: Hey, I'll reiterate—lots of good detail was in the release, but David or Terra, I just wanted to unpack the comments about the approaching $1 billion in sustainability EBITDA by '27.
Edward Egl: But David or Terry, I just wanted to unpack the comments about the approaching $1 billion in sustainability EBITDA by 2027. So I think in the release, you provided a baseline now. So I think that baseline is $300 million. And I just want to make sure that I have it right. But are you basically expecting the investments to yield, call it, slightly less than $700 million of incremental EBITDA over the timeframe? And can we comp that to the $760 to 800 that you laid out at the analyst day? And if so, can we just talk about what's driving that delta? So you absolutely have the parts right. And let me just take a step back on two key points. First, we're incredibly pleased with the progress on the recycling and the renewable energy investments.
But David or Terry, I just wanted to unpack the comments about the approaching $1 billion in sustainability EBITDA by 2027. So I think in the release, you provided a baseline now. So I think that baseline is $300 million. And I just want to make sure that I have it right. But are you basically expecting the investments to yield, call it, slightly less than $700 million of incremental EBITDA over the timeframe? And can we comp that to the $760 to 800 that you laid out at the analyst day? And if so, can we just talk about what's driving that delta?
Speaker #9: So I think in the release, you provided a baseline now. So I think that baseline is $300 million. And I just want to make sure that I have it right, but are you basically expecting the investments to yield, call it, slightly less than $700 million of incremental EBITDA over the timeframe?
First we're incredibly pleased with the progress on the recycling and the renewable energy Investments. It Bears repeating. What was in Jim's script with um 18% lower commodity prices and delivering 22% higher ebida on the recycling business, that's a testament to what we're delivering in labor Savings in premium savings. And we've had strong volume growth, which has a halo effect with our customers. And then likewise really having a lot of momentum on the RNG business. I I mentioned before that we're going to be doubling our output.
Speaker #9: And can we comp that to the $760 to $800 million that you laid out at the Analyst Day? And if so, can we just talk about what's driving that delta?
What you can Bridge from the 700 to the 760 is really just in 2 buckets.
Tara Hemmer: So you absolutely have the parts right. And let me just take a step back on two key points. First, we're incredibly pleased with the progress on the recycling and the renewable energy investments.
Speaker #8: So you absolutely have the parts right. And let me just take a step back on two key points. First, we're incredibly pleased with the progress on the recycling and the renewable energy investments.
Speaker #8: It bears repeating what was in Jim's script. With 18% lower commodity prices and delivering 22% higher EBITDA, on the recycling business, that's a testament to what we're delivering in labor savings, in premium savings, and we've had strong volume growth, which has a halo effect with our customers.
Edward Egl: It bears repeating what was in Jim's script with 18% lower commodity prices and delivering 22% higher EBITDA on the recycling business. That's a testament to what we're delivering in labor savings, in premium savings, and we've had strong volume growth, which has a halo effect with our customers. And then likewise, really having a lot of momentum on the RNG business. I mentioned before that we're going to be doubling our output. What you can bridge from the 700 to the 760 is really just in two buckets. The first is a difference in recycled commodity prices. What was in our investor day materials was $125 a ton, and now what is in the number is $70, which we do view as a low point. So you can consider that there could be some upside if and when commodity prices come back. And that's over half of it.
It bears repeating what was in Jim's script with 18% lower commodity prices and delivering 22% higher EBITDA on the recycling business. That's a testament to what we're delivering in labor savings, in premium savings, and we've had strong volume growth, which has a halo effect with our customers. And then likewise, really having a lot of momentum on the RNG business. I mentioned before that we're going to be doubling our output. What you can bridge from the 700 to the 760 is really just in two buckets. The first is a difference in recycled commodity prices. What was in our investor day materials was $125 a ton, and now what is in the number is $70, which we do view as a low point. So you can consider that there could be some upside if and when commodity prices come back. And that's over half of it.
The first is a difference in recycled commodity prices, uh, you know, what was in our investor day, materials was $125, a ton and and now what is in the number is 70, which we do view as a low point. So you can consider that there could be some upsides if and when commodity prices come back and that's over half of it, the other piece is if you go back
Speaker #8: And then likewise, really having a lot of momentum on the R&G business. I mentioned before that we're going to be doubling our output. What you can bridge from the 700 to the 760 is really just in two buckets.
The 2023 when we had come out with, uh, this broader platform, we've learned a lot and 1 of the things that we've learned is that there have been some difference differences in operating costs primarily related to electricity costs.
Speaker #8: The first is a difference in recycled commodity prices. What was in our investor day materials was 125 dollars a ton, and now what is in the number is 70, which we do view as a low point.
Speaker #8: So you can consider that there could be some upside if and when commodity prices come back, and that's over half of it. The other piece is, if you go back to 2023, when we had come out with this broader platform, we've learned a lot.
trying to predict things in our business way out and and that investor day uh,
Edward Egl: The other piece is if you go back to 2023, when we had come out with this broader platform, we've learned a lot. And one of the things that we've learned is that there have been some differences in operating costs, primarily related to electricity costs, which is a bit of a headwind, but also, in the medium and long term, a potential tailwind for us because we do have a robust landfill gas to electricity platform, and that is something that we can lean into as we look at whether or not we expand those types of facilities on our landfill. Tyler, this is kind of case in point to my earlier comment about trying to predict things in our business way out. And that investor day was the 2025 investor day, and you could go all the way back to the 2023 investor day about sustainability.
The other piece is if you go back to 2023, when we had come out with this broader platform, we've learned a lot. And one of the things that we've learned is that there have been some differences in operating costs, primarily related to electricity costs, which is a bit of a headwind, but also, in the medium and long term, a potential tailwind for us because we do have a robust landfill gas to electricity platform, and that is something that we can lean into as we look at whether or not we expand those types of facilities on our landfill.
Speaker #8: And one of the things that we've learned is that there have been some differences in operating costs, primarily related to electricity costs, which is a bit of a headwind, but also in the medium and long term, a potential tailwind for us because we do have a robust landfill gas-to-electricity platform and that is something that we can lean into as we look at whether or not we expand those types of facilities on our landfill.
You know, was the 2025 investor day and you could all go all the way back to the 2023 investor day about sustainability, just really difficult. So, we're kind of dealing with what we have at the time and so, you know, yes. Commodity prices have dipped and, and hence, the, the, you know, um, the 700. But, but I think it it kind of makes the point for us, that a, a is Tara said, I mean, these businesses are incredibly good Investments and
David Reed: Tyler, this is kind of case in point to my earlier comment about trying to predict things in our business way out. And that investor day was the 2025 investor day, and you could go all the way back to the 2023 investor day about sustainability.
Speaker #2: Tyler, this is kind of a case in point to my earlier comment about trying to predict things in our business way out, and that investor day was the 2025 Investor Day. And you could all go all the way back to the 2023 Investor Day about sustainability.
The paybacks on them, particularly the renewable natural gas plants. You know, well, well, I think we originally said they were 2 and a half to 3 now. They may be 3 to 4 but still incredibly good paybacks. But this the anything that's commodity related is you as you can imagine. It's just really hard to predict that far out.
Speaker #2: It's just really difficult, so we're kind of dealing with what we have at the time. And so, yes, commodity prices have dipped, and hence the $700.
Edward Egl: Just really difficult. So we're kind of dealing with what we have at the time. And so yes, commodity prices have dipped, and hence the $700. But I think it kind of makes the point for us that, A, as Terry said, I mean, these businesses are incredibly good investments, and the paybacks on them, particularly the renewable natural gas plants, well, I think we originally said they were 2.5 to 3. Now they may be 3 to 4, but still incredibly good paybacks. But anything that's commodity related, as you can imagine, is just really hard to predict that far out. Yeah. No. I just was trying to get the delta. That was extremely, extremely helpful. John Morris, question for you. So if I look at the normal course CapEx, it looks like that CapEx number is running at less than 9.5% of sales.
Just really difficult. So we're kind of dealing with what we have at the time. And so yes, commodity prices have dipped, and hence the $700. But I think it kind of makes the point for us that, A, as Terry said, I mean, these businesses are incredibly good investments, and the paybacks on them, particularly the renewable natural gas plants, well, I think we originally said they were 2.5 to 3. Now they may be 3 to 4, but still incredibly good paybacks. But anything that's commodity related, as you can imagine, is just really hard to predict that far out.
Yeah, no I just I just was trying to, to get the Delta that that was extremely, extremely helpful. Uh, John Morris question for you. So if I look at the normal course capex, um, it looks like that capex number is running at less than 9.5% of sales.
It just feels maybe a bit light I realized that. Sarah cycle is less Capital intensive so that's part of it.
Speaker #2: But what I think—it kind of makes the point for us that, A, as Terra said, I mean, these businesses are incredibly good investments, and the paybacks on them—particularly the renewable natural gas plants—while I think we originally said they were 2.5 to 3, now they may be 3 to 4, but still incredibly good paybacks. But anything that's commodity related, as you can imagine, is just really hard to predict that far.
Uh, but is this a kind of a good?
Call it forward. Capital plan is there something unique in 26 to keeps the budget down. I think you and Jim mentioned the lower Fleet age but I just want to just try to level set on where where that capex will run longer term. Thanks guys.
Speaker #2: out. Yeah, no, I just was trying
Tyler Brown: Yeah. No. I just was trying to get the delta. That was extremely, extremely helpful. John Morris, question for you. So if I look at the normal course CapEx, it looks like that CapEx number is running at less than 9.5% of sales.
Speaker #9: to get the delta. That was extremely, extremely helpful. John Morris, question for you. So if I look at the normal course capex, it looks like that capex number is running at less than 9.5% of sales.
Speaker #9: It just feels maybe a bit light. I realize that stair cycle is less capital intensive, so that's part of it. But is this a kind of a good, call it, forward capital plan?
Edward Egl: It just feels maybe a bit light. I realize that Stericycle is less capital intensive, so that's part of it. But is this a kind of a good, call it, forward capital plan? Is there something unique in 2026 that keeps the budget down? I think you and Jim mentioned the lower fleet age, but I just want to just try to level set on where that CapEx will run longer term. Thanks, guys. I think probably a little higher than that, Tyler. Probably the 10-ish% off the cuff. There's a few things you mentioned. One, 1,500 trucks is what we said is probably normal run rate for the traditional solid waste business. And as Jim mentioned, we've been obviously catching up and advancing some of those investments, which, by the way, are clearly paying off, as I mentioned in my prepared remarks.
It just feels maybe a bit light. I realize that Stericycle is less capital intensive, so that's part of it. But is this a kind of a good, call it, forward capital plan? Is there something unique in 2026 that keeps the budget down? I think you and Jim mentioned the lower fleet age, but I just want to just try to level set on where that CapEx will run longer term. Thanks, guys.
Speaker #9: Is there something unique in '26 that keeps the budget down? I think you and Jim mentioned a lower fleet age, but I just want to just try to capex will run longer term.
Speaker #9: Level set on where that is. Thanks,
Speaker #9: Guys, I think probably a little.
John Morris: I think probably a little higher than that, Tyler. Probably the 10-ish% off the cuff. There's a few things you mentioned. One, 1,500 trucks is what we said is probably normal run rate for the traditional solid waste business. And as Jim mentioned, we've been obviously catching up and advancing some of those investments, which, by the way, are clearly paying off, as I mentioned in my prepared remarks.
Speaker #2: Higher than that, Tyler, probably the 10-ish percent off the cuff. There's a few things you mentioned. One, 1,500 trucks is what we said is probably normal run rate for the traditional solid waste business and, as Jim mentioned, we've been obviously catching up and advancing some of those investments, which, by the way, are clearly paying off.
1,500 trucks is what we said is probably normal run rate for the for the traditional Solid Waste business. And as Jim mentioned, we we've been, uh, obviously catching up and advancing some of those Investments, which by the way are clearly paying off. Uh, as I mentioned, in my prepared remarks, we got, we do have some work to do on the fleet with, uh, the Health Care on the healthcare side is because they least virtually every 1 of their vehicles. But we are systematically, uh, unwinding that where it makes sense and when it makes sense, right? So there's a timing aspect to when we peel back, uh, some of those, uh, leases and then, lastly, obviously the, uh, the, uh, sustainability Investments as you saw in the, in the, in the release. And, and the remarks here is coming down by roughly 400 million to 200 million. So there's some puts and takes. But back to where we started, I think that 10ish percent, uh, range is probably a, a good mile marker in terms of go forward capital.
Yep, perfect. Okay, thanks guys.
Our next question coming from the lineup.
Tony Kaplan with.
Speaker #2: As I mentioned in my prepared remarks, we do have some work to do on the fleet with the healthcare on the healthcare side is because they leased virtually every one of their vehicles.
Edward Egl: We do have some work to do on the fleet with the healthcare. On the healthcare side, it's because they leased virtually every one of their vehicles. But we are systematically unwinding that where it makes sense and when it makes sense, right? So there's a timing aspect to when we peel back some of those leases. And then lastly, obviously, the sustainability investments, as you saw in the release and the remarks here, are coming down by roughly $400 million to 200 million. So there's some puts and takes, but back to where we started, I think that 10-ish% range is probably a good mile marker in terms of go-forward capital. Yep. Perfect. Okay. Thanks, guys. Thank you. Our next question is coming from the line of Toni Kaplan with Morgan Stanley. Your line is now open. Thanks so much. I also wanted to ask about the healthcare business.
We do have some work to do on the fleet with the healthcare. On the healthcare side, it's because they leased virtually every one of their vehicles. But we are systematically unwinding that where it makes sense and when it makes sense, right? So there's a timing aspect to when we peel back some of those leases. And then lastly, obviously, the sustainability investments, as you saw in the release and the remarks here, are coming down by roughly $400 million to 200 million. So there's some puts and takes, but back to where we started, I think that 10-ish% range is probably a good mile marker in terms of go-forward capital.
Speaker #2: So we are systematically unwinding that where it makes sense and when it makes sense, right? So there's a timing aspect to when we peel back some of those leases.
Speaker #2: And then lastly, obviously, the sustainability investments, as you saw in the release and the remarks here, is coming down by roughly $400 million to $200 million.
Speaker #2: So there's some puts and takes, but back to where we started, I think that 10-ish percent range is probably a good mile marker in terms of go-forward capital.
Thanks so much. Um, I also wanted to ask about the health care business. Um, you talked about the 3% growth next year. The 4.2% pricing, um, it sounds like you're still having some of the issues with the star cycle customers. Um, you mentioned the credit memos, do you expect all this to be resolved this year? And how are you thinking about growth in this segment for future years? And just maybe if you could talk about market conditions within the medical waste space and if that's proceeding, how how you
Tyler Brown: Yep. Perfect. Okay. Thanks, guys.
Speaker #9: Yeah, perfect. Okay. Thanks,
Speaker #9: guys. Thank
Operator: Thank you. Our next question is coming from the line of Toni Kaplan with Morgan Stanley. Your line is now open.
Speaker #10: Our next question is coming from the lineup. Tony Kaplan with Morgan Stanley, you'll let us know. Open.
Toni Kaplan: Thanks so much. I also wanted to ask about the healthcare business.
Speaker #11: Thanks so much. I also wanted to ask about the healthcare business. You talked about the 3% growth next year, the 4.2% pricing. It sounds like you're still having some of the issues with the stair cycle customers you mentioned, the credit memos.
Edward Egl: You talked about the 3% growth next year, the 4.2% pricing. It sounds like you're still having some of the issues with the Stericycle customers. You mentioned the credit memos. Do you expect all this to be resolved this year? And how are you thinking about growth in this segment for future years? And just maybe if you could talk about market conditions within the medical waste space and if that's proceeding, how you sort of saw it when the deal was launched or when you announced the transaction where you were talking about sort of a higher market growth for the health space. Yeah. So fair question here.
You talked about the 3% growth next year, the 4.2% pricing. It sounds like you're still having some of the issues with the Stericycle customers. You mentioned the credit memos. Do you expect all this to be resolved this year? And how are you thinking about growth in this segment for future years? And just maybe if you could talk about market conditions within the medical waste space and if that's proceeding, how you sort of saw it when the deal was launched or when you announced the transaction where you were talking about sort of a higher market growth for the health space.
Speaker #11: Do you expect all this to be resolved this year? And how are you thinking about growth in this segment for future years? And just maybe if you could talk about market conditions within the medical waste space and if that's proceeding how you sort of saw it when the deal was launched or when you announced the transaction, where you were talking about sort of a higher market growth for the health space.
Sort of saw it when the deal was was launched, um, or when you announced the transaction where you were talking about sort of a higher market growth for for the health space. Yes. So fair question here. Um, and 1 thing, I would maybe correct you on a little bit. Is the customer? We, that's why I wanted to make sure I mentioned that we're getting to. And I would argue, we're, we're there where the customer is, getting a a good invoice, they're getting a payable invoice. There's a lot going on behind the scenes for that, especially for the larger customers. By the way, there is a lot going on behind the scenes for our larger customers in the Legacy business, too, in our national accounts. There's there's a lot of manual effort that that is ongoing there, but Our intention was to really
Really kind of build a wall between the back office work, that is ongoing and we'll be ongoing through 26 and what the customer sees and that's why in my remarks. I I talked about
Jim Fish: Yeah. So fair question here.
Speaker #2: Yeah. So fair question here. And one thing I would maybe correct you on a little bit is the customer, that's why I wanted to make sure I mentioned that we're getting to, and I would argue we're there where the customer is getting a good invoice.
Edward Egl: One thing I would maybe correct you on a little bit is the customer. That's why I wanted to make sure I mentioned that we're getting to, and I would argue we're there, where the customer is getting a good invoice; they're getting a payable invoice. There's a lot going on behind the scenes for that, especially for the larger customers. By the way, there is a lot going on behind the scenes for our larger customers in the legacy business too, in our national accounts. There's a lot of manual effort that is ongoing there. But our intention was to really kind of build a wall between the back office work that is ongoing, and we'll be ongoing through 2026, and what the customer sees. And that's why in my remarks, I talked about the improvement in our customer service stats to levels above our legacy business.
One thing I would maybe correct you on a little bit is the customer. That's why I wanted to make sure I mentioned that we're getting to, and I would argue we're there, where the customer is getting a good invoice; they're getting a payable invoice. There's a lot going on behind the scenes for that, especially for the larger customers. By the way, there is a lot going on behind the scenes for our larger customers in the legacy business too, in our national accounts. There's a lot of manual effort that is ongoing there. But our intention was to really kind of build a wall between the back office work that is ongoing, and we'll be ongoing through 2026, and what the customer sees. And that's why in my remarks, I talked about the improvement in our customer service stats to levels above our legacy business.
The, you know, the improvement in our customer service, stats to levels above, uh, our our Legacy business that is all super encouraging and tells us. And I and I, I think I'm, you know, I mentioned that that um, that 1 of our customers recognized us for, for really improving our invoicing. That was a big customer. I didn't name the customer at a big customer.
Speaker #2: They're getting a payable invoice. There's a lot going on behind the scenes for that, especially for the larger customers. By the way, there is a lot going on behind the scenes for our larger customers in the legacy business too, in our national accounts.
Speaker #2: There's a lot of manual effort that is ongoing there. But our intention was to really kind of build a wall between the back office work that is ongoing.
That's part of the Erp that we've talked about.
Speaker #2: And we'll be ongoing through '26. And what the customer sees. And that's why in my remarks, I talked about the improvement in our customer service stats to levels above our legacy business.
Speaker #2: That is all super encouraging and tells us, and I think I mentioned that one of our customers recognized us for really improving our invoicing.
Edward Egl: That is all super encouraging and tells us, and I think I mentioned that one of our customers recognized us for really improving our invoicing. That was a big customer. I didn't name the customer, but a big customer. So all of that tells me that we've done an effective job of putting that kind of wall in place so the customers, they really don't care what goes on in the background as long as they're getting good service and a good invoice. And then we will take care of the system issues. We'll take care of the process issues, all of that. And that is all we're making big progress on that. It's all ongoing. So all that's part of the ERP that we've talked about many times. It also gives us the ability to, as I mentioned, and you asked about kind of the growth of this business.
That is all super encouraging and tells us, and I think I mentioned that one of our customers recognized us for really improving our invoicing. That was a big customer. I didn't name the customer, but a big customer. So all of that tells me that we've done an effective job of putting that kind of wall in place so the customers, they really don't care what goes on in the background as long as they're getting good service and a good invoice. And then we will take care of the system issues. We'll take care of the process issues, all of that. And that is all we're making big progress on that. It's all ongoing. So all that's part of the ERP that we've talked about many times. It also gives us the ability to, as I mentioned, and you asked about kind of the growth of this business.
Uh, many times. It it also gives us um, the ability to as I as I mentioned and you, you asked about kind of the, the growth of this business. Look, I would tell you this, you know, we I think we said 5 to 6% and and really as you think about what we gave for for 2026,
Speaker #2: That was a big customer. I didn't name the customer, but a big customer. So all of that tells me that we've done an effective job of putting that kind of wall in place.
Speaker #2: So the customers, they really don't care what goes on in the background as long as they're getting good service. And a good invoice. And then we will take care of the system issues.
Speaker #2: We'll take care of the process issues—all of that. And we're making big progress on that. It's all ongoing. So, all that's part of the ERP that we've talked about many times.
4.2% price. But, but only 3%, Top Line. And, and, and that negative volume piece. As I mentioned, is largely related to these these accounts that we've lost and we knew we had lost them. And we knew that it was going to have an impact on Q4, and we know it's going to have an impact on on, you know, the first half of 2026 as we get to the back half of 2026, that actually turns into potentially a Tailwind for us on a year-over-year basis.
Speaker #2: It also gives us the ability to, as I mentioned—and you asked about kind of the growth of this business—look, I would tell you this.
And and then the, the last thing I'll mention about this. So so I guess to, to finish that point, I, we do feel very good about the Strategic business case for this. I know there's some been some, you know, some skepticism out there about
Edward Egl: Look, I would tell you this. I think we said 5% to 6%. And really, as you think about what we gave for 2026, 4.2% price, but only 3% top line. And that negative volume piece, as I mentioned, is largely related to these accounts that we've lost. And we knew we had lost them, and we knew that it was going to have an impact on Q4, and we know it's going to have an impact on the first half of 2026. As we get to the back half of 2026, that actually turns into potentially a tailwind for us on a year-over-year basis. And then the last thing I'll mention about this, so I guess to finish that point, we do feel very good about the strategic business case for this.
Look, I would tell you this. I think we said 5% to 6%. And really, as you think about what we gave for 2026, 4.2% price, but only 3% top line. And that negative volume piece, as I mentioned, is largely related to these accounts that we've lost. And we knew we had lost them, and we knew that it was going to have an impact on Q4, and we know it's going to have an impact on the first half of 2026. As we get to the back half of 2026, that actually turns into potentially a tailwind for us on a year-over-year basis. And then the last thing I'll mention about this, so I guess to finish that point, we do feel very good about the strategic business case for this.
Speaker #2: I think we said 5 to 6 percent. And really, as you think about what we gave for 2026, 4.2% price, but only 3% top line.
You know, well is this business not going to grow with the 5%?
You take out the those those lost accounts and and you're almost there.
Right now. So when we get to the back half of next year and into 2027,
Speaker #2: And that negative volume piece, as I mentioned, is largely related to these accounts that we've lost. And we knew we had lost them. And we knew that it was going to have an impact on Q4.
when you look at, um, you know, the that the the pricing power that we have across the entire organization and when you look at um, the fact that this
Speaker #2: And we know it's going to have an impact on the first half of 2026. As we get to the back half of 2026, that actually turns into potentially a tailwind for us on a year-over-year basis and then the last thing I'll mention about this.
This uh, business demographically. I mean, I if I were to ask you, what business should you be in over the next 20 years?
Speaker #2: So, I guess to finish that point, we do feel very good about the strategic business case for this. I know there's been some skepticism out there about, well, is this business not going to grow at the 5 to 6 percent?
Edward Egl: I know there's been some skepticism out there about, well, is this business not going to grow at the 5% to 6%? You take out those lost accounts, and you're almost there right now. So when we get to the back half of next year and into 2027, when you look at the pricing power that we have across the entire organization, and when you look at the fact that this business demographically, I mean, if I were to ask you what business should you be in over the next 20 years, I would think that healthcare is one of those with this aging population in the US, in Canada, and in the UK. So that has to be a beneficiary of it. So I think my long answer is, yes, we're very confident in the growth trajectory for the business.
I know there's been some skepticism out there about, well, is this business not going to grow at the 5% to 6%? You take out those lost accounts, and you're almost there right now. So when we get to the back half of next year and into 2027, when you look at the pricing power that we have across the entire organization, and when you look at the fact that this business demographically, I mean, if I were to ask you what business should you be in over the next 20 years, I would think that healthcare is one of those with this aging population in the US, in Canada, and in the UK. So that has to be a beneficiary of it. So I think my long answer is, yes, we're very confident in the growth trajectory for the business.
Speaker #2: You take out those lost accounts, and you're almost there right now. So when we get to the back half of next year and into 2027, when you look at that, the pricing power that we have across the entire organization, and when you look at the fact that this business demographically, I mean, if I were to ask you what business should you be in over the next 20 years, I would think that healthcare is one of those with this aging population in the US and in Canada and the UK.
I would think that Healthcare is, is 1 of those with this aging population in the US and in Canada, and the UK. So, uh, that has to be a beneficiary of it. So I, I think my long answer is, yes, we're very confident in the, the growth trajectory for the business. And we're also very pleased with the progress we've made. Not done yet, but we've built this wall and the customer is now seeing uh, you know, a a, a good invoice and and um,
A good service level.
Great. And just moving to, you mentioned some technology and automation improvements that you've made. Um, when you think about 2026, which areas are you most focused on, uh, for efficiency or technology, just anything that, um, to highlight with level of automation, that you're able to continue to do um, and which areas have the most runway for that? I think.
Speaker #2: So that has to be a beneficiary of it. So I think my long answer is yes, we're very confident in the growth trajectory for the business.
Speaker #2: And we're also very pleased with the progress we've made not done yet, but we've built this wall. And the customer is now seeing a good invoice and a good service level.
Edward Egl: And we're also very pleased with the progress we've made. Not done yet, but we've built this wall, and the customer is now seeing a good invoice and a good service level. Great. And just moving to, you mentioned some technology and automation improvements that you've made. When you think about 2026, which areas are you most focused on for efficiency or technology? Just anything to highlight with level of automation that you're able to continue to do, and which areas have the most runway for that? Thanks. Maybe I'll start with, and Terry can chime in. On the recycling side, I think you've seen the benefits. Terry commented in some of her answers about the progress we've made from the investments we've made in recycling.
And we're also very pleased with the progress we've made. Not done yet, but we've built this wall, and the customer is now seeing a good invoice and a good service level.
Toni Kaplan: Great. And just moving to, you mentioned some technology and automation improvements that you've made. When you think about 2026, which areas are you most focused on for efficiency or technology? Just anything to highlight with level of automation that you're able to continue to do, and which areas have the most runway for that? Thanks.
Speaker #11: Great. And just moving to—you mentioned some technology and automation improvements that you've made. When you think about 2026, which areas are you most focused on for efficiency or technology?
Speaker #11: Just anything that to highlight with level of automation that you're able to continue to do and which areas have the most runway for that?
Speaker #11: Thanks.
David Reed: Maybe I'll start with, and Terry can chime in. On the recycling side, I think you've seen the benefits. Terry commented in some of her answers about the progress we've made from the investments we've made in recycling.
Speaker #2: Maybe I'll start with, and Tarek can chime in on the
Speaker #2: recycling side. I think you've seen the benefits. Tarek commented in some of our answers about the progress we've made. From the investments we've made in recycling, a lot of that has driven sort of the middle of the P&L.
Maybe I'll start with Tara, can chime in on the recycling side? I think you've seen the benefits Tara commented in in, uh, some of her answers about the progress we've made from the Investments we've made in recycling, and a lot of that has driven, uh, sort of the middle of the p&l. And that's where technology enablement. Uh, and AI are paying off already. And we've made a lot of progress there when you think about the 15,000 refugees Vehicles, we run. And now another called another 45,500 on the healthcare side, building out technology enablement. As a logistics service is where your I think that's paying off, too. When you look at the margins in the Opex in particular and the momentum that we've built in 24 into 25 and into Q4, I think you're going to see that continue to carry forward into uh into 2026. And then lastly, on the post collection side, we've talked a lot about the value of our Network and having strategically placed Assets. In the post collection side whether it's transfer facilities, recycling facilities, landfill facilities. We're taking a kind of an iot approach that our landfills too by embedding technology.
Edward Egl: A lot of that has driven sort of the middle of the P&L, and that's where technology enablement and AI are paying off already, and we've made a lot of progress there. When you think about the 15,000 refuse vehicles we run and now called another 4,500 on the healthcare side, building out technology enablement as a logistics service is where you're, I think that's paying off too. When you look at the margins in the OpEx in particular and the momentum that we've built in 2024 into 2025 and into Q4, I think you're going to see that continue to carry forward into 2026. And then lastly, on the post-collection side, we've talked a lot about the value of our network and having strategically placed assets in the post-collection side, whether it's transfer facilities, recycling facilities, or landfill facilities.
A lot of that has driven sort of the middle of the P&L, and that's where technology enablement and AI are paying off already, and we've made a lot of progress there. When you think about the 15,000 refuse vehicles we run and now called another 4,500 on the healthcare side, building out technology enablement as a logistics service is where you're, I think that's paying off too. When you look at the margins in the OpEx in particular and the momentum that we've built in 2024 into 2025 and into Q4, I think you're going to see that continue to carry forward into 2026. And then lastly, on the post-collection side, we've talked a lot about the value of our network and having strategically placed assets in the post-collection side, whether it's transfer facilities, recycling facilities, or landfill facilities.
Speaker #2: technology enablement and And that's where AI are paying off already. And we've made a lot of progress there. When you think about the 15,000 refuse vehicles we run and now another called another 4,500 on the healthcare side, building out technology enablement as a logistics service is where you're, I think that's paying off too.
And those uh facilities that's going to give us visibility to the operation in a much more, uh, efficient manner than we traditionally have done, uh, and those are complex operations as, you know. So we still see a lot of opportunity on the post collection side, particularly landfills to, to embed technology to, uh, to really drive down operating costs there as well.
Thanks.
Speaker #2: When you look at the margins in the OPEX in particular and the momentum that we've built in '24 into '25 and into Q4, I think you're going to see that continue to carry forward into 2026.
Thank you. Now, next question coming from the lineup. Fisa. I'll be with Deutsche Bank and is now open.
Speaker #2: And then lastly, on the post-collection side, we've talked a lot about the value of our network and having strategically placed assets in the post-collection side, whether it's transfer facilities, recycling facilities, or landfill facilities.
Speaker #2: We're taking a kind of an IoT approach at our landfills too by embedding technology in those facilities. That's going to give us visibility to the operation in a much more efficient manner than we traditionally have done.
Edward Egl: We're taking kind of an IoT approach at our landfills too by embedding technology in those facilities. That's going to give us visibility to the operation in a much more efficient manner than we traditionally have done. And those are complex operations, as you know, so we still see a lot of opportunity on the post-collection side, particularly landfills, to embed technology to really drive down operating costs there as well. Thanks. Thank you. Our next question coming from the line of Faiza Alwy with Deutsche Bank. Your line is now open. Yes. Hi. Thank you. I wanted to ask about just volumes on the Collection and Disposal business in the fourth quarter. I thought they came in a little bit light relative to what we've seen, and I know we've had some, obviously, special waste volumes.
We're taking kind of an IoT approach at our landfills too by embedding technology in those facilities. That's going to give us visibility to the operation in a much more efficient manner than we traditionally have done. And those are complex operations, as you know, so we still see a lot of opportunity on the post-collection side, particularly landfills, to embed technology to really drive down operating costs there as well.
Speaker #2: And those are complex operations, as you know. So we still see a lot of opportunity on the post-collection side, particularly landfills to embed technology to really drive down operating costs there as well.
Toni Kaplan: Thanks.
Speaker #11: Thanks.
Operator: Thank you. Our next question coming from the line of Faiza Alwy with Deutsche Bank. Your line is now open.
Speaker #4: Thank you. Now, next question coming from the lineup. Faisal, are we with Deutsche Bank? Yoland is now open.
Faiza Alwy: Yes. Hi. Thank you. I wanted to ask about just volumes on the Collection and Disposal business in the fourth quarter. I thought they came in a little bit light relative to what we've seen, and I know we've had some, obviously, special waste volumes.
Speaker #12: Yes, hi. Thank you. I wanted to ask about just the volumes and the collection and disposal business in the fourth quarter. I thought they came in a little bit light relative to what we've seen.
Speaker #12: And I know we've had some obviously special waste volumes. And I know earlier in the call you talked about sort of the industrial business and the macro environment there and that you're optimistic.
When we get to to the first quarter results but we we make that up. I mean you know we don't we don't let our area folks say well weather impacts May. Therefore I'm going to you know, I'm going to be coming in under under my budget but it did impact volume a bit as you see with the numbers. It didn't impact the overall numbers. Um, so we made it up on the Ia line, but, but when you think about volume it it did have a bit of an impact on
Edward Egl: And I know earlier in the call, you talked about sort of the industrial business and the macro environment there and that you're optimistic. So I'm just curious, is there anything more to consider as it relates to collection and disposal volumes in the quarter relative to trend other than just special waste? Yeah. Look, we don't talk much about weather just because we choose to make it up. I would tell you that weather impacted us in December and likely is going to impact us this week when we get to the Q1 results. But we make that up. I mean, we don't let our area folks say, "Well, weather impacted me, therefore I'm going to be coming in under my budget." But it did impact volume a bit. As you see with the numbers, it didn't impact the overall numbers.
And I know earlier in the call, you talked about sort of the industrial business and the macro environment there and that you're optimistic. So I'm just curious, is there anything more to consider as it relates to collection and disposal volumes in the quarter relative to trend other than just special waste?
Speaker #12: So, I'm just curious—is there anything more to consider as it relates to collection and disposal volumes in the quarter relative to trend, other than just special?
Mssw was was a bit soft, um, and and much of. That was a result of, uh, the 2 lines of business that are most impacted negatively by whether our MSW hand, the industrialized business, and
So those were were clearly impacted by the weather in early December, I suspect that they'll be impacted this week too. So that that that would be my answer. Um,
Speaker #12: waste? Yeah.
Jim Fish: Yeah. Look, we don't talk much about weather just because we choose to make it up. I would tell you that weather impacted us in December and likely is going to impact us this week when we get to the Q1 results. But we make that up. I mean, we don't let our area folks say, "Well, weather impacted me, therefore I'm going to be coming in under my budget." But it did impact volume a bit. As you see with the numbers, it didn't impact the overall numbers.
Speaker #2: Look, we don't talk much about weather just because we choose to make it up. I would tell you that weather impacted us in December.
That that may have caused a little bit of softness there, but it, but it doesn't impact the dollar.
Speaker #2: And likely is going to impact us this week when we get to the first quarter results. But we make that up. I mean, we don't let our area folks say, 'Well, weather impacts me, therefore I'm going to be coming in under my budget.' But it did impact volume a bit.
Speaker #2: As you see with the numbers, it didn't impact the overall numbers. So we made it up on the EBITDA line. But when you think about volume, it did have a bit of an impact on volume MSW was a bit soft.
Edward Egl: So we made it up on the EBITDA line. But when you think about volume, it did have a bit of an impact on volume. MSW was a bit soft, and much of that was a result of the two lines of business that are most impacted negatively by weather, are MSW and the industrial line of business. And so those were clearly impacted by the weather in early December. I suspect that they'll be impacted this week too. So that would be my answer that may have caused a little bit of softness there, but it doesn't impact the EBITDA line. The only thing I add on there, Jim, is residential is the one that sticks out. It's been negative for a number of quarters.
So we made it up on the EBITDA line. But when you think about volume, it did have a bit of an impact on volume. MSW was a bit soft, and much of that was a result of the two lines of business that are most impacted negatively by weather, are MSW and the industrial line of business. And so those were clearly impacted by the weather in early December. I suspect that they'll be impacted this week too. So that would be my answer that may have caused a little bit of softness there, but it doesn't impact the EBITDA line.
Speaker #2: And much of that was a result of the two lines of business that are most impacted negatively by weather: MSW and the industrial line of business.
Speaker #2: And so those were clearly impacted by the weather in early December. I suspect that they'll be impacted this week too. So that would be my answer that may have caused a little bit of softness there.
All right, the only thing I add on there. Jim is residential is the 1 that sticks out. It's been it's been negative for a number of quarters and I would tell you while we see that starting to turn into more of a growth engine in 2026, when you look at 2025, we finished the year at high teens and even thought margin side in over 20 for, uh, for the quarter on residential, which has always been a high water mark for us. So I kind of look at the at the volume, uh, attrition there a little bit different than I would the other pieces of volume. But again, I think it's important. We see that, we see the teams pivoting from using that as uh, uh, shrinking, the greatness to now growing to, uh, to even better margins as we go forward. In that particular line of, well, I think it's been mentioned today but also, you know, if, if it hasn't we we should reiterate. The the fact that on the ball,
Volume line. When we look at 2026, we have a 50 basis points headwind on volume.
Speaker #2: But it doesn't impact the EBITDA line.
John Morris: The only thing I add on there, Jim, is residential is the one that sticks out. It's been negative for a number of quarters.
From that fire volume, um, that we got last year on the West Coast.
Speaker #3: The only thing I'd add on there, Jim, is residential is the one that sticks out. It's been negative for a number of quarters. And I would tell you, while we see that starting to turn into more of a growth engine in 2026, when you look at 2025, we finished the year at high teens in EBITDA margin side and over 20% for the quarter on residential, which has always been a high watermark for us.
Edward Egl: And I would tell you, while we see that starting to turn into more of a growth engine in 2026, when you look at 2025, we finished the year at high teens on the EBITDA margin side and over 20 for the quarter on residential, which has always been a high watermark for us. So I kind of look at the volume attrition there a little bit different than I would the other pieces of volume. But again, I think it's important we see that we see the teams pivoting from using that as shrinking to greatness to now growing to even better margins as we go forward in that particular line of business.
And I would tell you, while we see that starting to turn into more of a growth engine in 2026, when you look at 2025, we finished the year at high teens on the EBITDA margin side and over 20 for the quarter on residential, which has always been a high watermark for us. So I kind of look at the volume attrition there a little bit different than I would the other pieces of volume. But again, I think it's important we see that we see the teams pivoting from using that as shrinking to greatness to now growing to even better margins as we go forward in that particular line of business.
The the tough part about that, um, is that we don't, you know, look, unfortunately, natural disasters seem to be happening fairly regularly, but we, we don't forecast them for obvious reasons. So, um, so right now we don't have anything built in. We have asked our field operations to figure out how to make up that. Um, that's a tough makeup because it was, uh,
Speaker #3: So I kind of look at the volume attrition there a little bit different than I would the other pieces of volume. But again, I think it's important we see that we see the teams pivoting from using that as shrinking the greatness to now growing to even better margins as we go forward in that
Speaker #3: particular line of business. Well, I think it's been mentioned today,
Edward Egl: Well, I think it's been mentioned today, Faiza, but also, if it hasn't, we should reiterate the fact that on the volume line, when we look at 2026, we have a 50 basis points headwind on volume from that fire volume that we got last year on the West Coast. The tough part about that is that we don't look, unfortunately, natural disasters seem to be happening fairly regularly, but we don't forecast them for obvious reasons. So right now, we don't have anything built in. We have asked our field operations to figure out how to make up that. That's a tough makeup because it was a pretty big headwind on volume, also a big headwind on EBITDA. $82 million was the number from last year on the EBITDA line.
Jim Fish: Well, I think it's been mentioned today, Faiza, but also, if it hasn't, we should reiterate the fact that on the volume line, when we look at 2026, we have a 50 basis points headwind on volume from that fire volume that we got last year on the West Coast. The tough part about that is that we don't look, unfortunately, natural disasters seem to be happening fairly regularly, but we don't forecast them for obvious reasons. So right now, we don't have anything built in. We have asked our field operations to figure out how to make up that. That's a tough makeup because it was a pretty big headwind on volume, also a big headwind on EBITDA. $82 million was the number from last year on the EBITDA line.
Speaker #2: Faisal, but also, if it hasn't, we should reiterate the fact that on the volume line, when we look at 2026, we have a 50 basis point headwind on volume from that fire volume that we got last year on the West Coast.
Speaker #2: The tough part about that is that we don't look, unfortunately, natural disasters seem to be happening fairly regularly. But we don't forecast them for obvious reasons.
A pretty big headwind on volume. Also a big hit when on ibidi, 82 million dollars, uh, was the number from last year on the IBA lot. So, um, so when you look at, whether you look at volume, whether you look at IBA, you might say, well, gosh, you know, a lot of the reports were saying a bit soft on guidance. Keep in mind, that that's why I pointed out that 7.4% even dog growth. If you take out that that, that 1 time impact from the fires, uh, unfortunately these things do happen. So something else may happen. It may not be as big. Hopefully it's not, hopefully we don't have anything this year, but if we do uh we have the assets, the geographic coverage the people. We have all of that to to take care of our uh,
Of our customers.
Speaker #2: So right now, we don't have anything built in. We have asked our field operations to figure out how to make up that. That's a tough makeup because it was a pretty big headwind on volume, also a big headwind on EBITDA, $82 million was the number from last year on the EBITDA line.
Speaker #2: So when you look at whether you look at volume, whether you look at EBITDA, you may say, "Well, gosh, a lot of the reports were saying a bit soft on guidance." Keep in mind that that's why I pointed out that 7.4% EBITDA growth, if you take out that one-time impact from the fires, unfortunately, these things do happen.
Edward Egl: So when you look at whether you look at volume, whether you look at EBITDA, you may say, "Well, gosh, a lot of the reports were saying a bit soft on guidance." Keep in mind that that's why I pointed out that 7.4% EBITDA growth, if you take out that one-time impact from the fires, unfortunately, these things do happen. And so something else may happen. It may not be as big. Hopefully, it's not. Hopefully, we don't have anything this year. But if we do, we have the assets, the geographic coverage, the people. We have all of that to take care of our customers. Yeah. Understood. Makes sense. And then I was going to ask about just the margin guide for next year. And I was hoping there are a few moving pieces in particular with the wildfires.
So when you look at whether you look at volume, whether you look at EBITDA, you may say, "Well, gosh, a lot of the reports were saying a bit soft on guidance." Keep in mind that that's why I pointed out that 7.4% EBITDA growth, if you take out that one-time impact from the fires, unfortunately, these things do happen. And so something else may happen. It may not be as big. Hopefully, it's not. Hopefully, we don't have anything this year. But if we do, we have the assets, the geographic coverage, the people. We have all of that to take care of our customers.
Understood makes sense. And then you know I was going to ask about the just the margin guide for next year and was hoping, you know, there are a few moving pieces in particular with the wildfires. And and also, I guess this is the role end of the sustainability projects. So you know maybe you can help us a little bit around the quarterly, Cadence.
Of of margins at a high level and how to think about that.
Speaker #2: And so something else may happen. It may not be as big. Hopefully, it's not. Hopefully, we don't have anything this year but if we do, we have the assets, the geographic coverage, the people.
Speaker #2: We have all of that to take care of our customers.
Faiza Alwy: Yeah. Understood. Makes sense. And then I was going to ask about just the margin guide for next year. And I was hoping there are a few moving pieces in particular with the wildfires.
Speaker #4: Yeah. Understood. Makes sense. And then I was going to ask about just the margin guide for next year. And was hoping there are a few moving pieces in particular with the wildfires.
Sure, I'll give you some of the components. This is David. Um, I yeah, I'd be remiss if I didn't talk. Just about the records, that, that was mentioned previously, you know, both in the quarter of 31.3% and for the full year of 30.1, which I do think is a testament to how our team members focus and dedicate, um, on this throughout the year. But as we looked at 20126, uh, we're calling for, you know, our fourth consecutive year of of of uh, Eva margin expansion of of 30 basis points at the midpoint, but as Jim just alluded to 50 basis points on an adjusted basis. Um,
Speaker #4: And also, I guess this is the roll-in of the sustainability projects. So maybe you can help us a little bit around the quarterly cadence of margins at a high level and how to think about that.
Edward Egl: I guess this is the roll-in of the sustainability projects. So maybe you can help us a little bit around the quarterly cadence of margins at a high level and how to think about that. Sure. I'll give you some of the components. This is David. I'd be remiss if I didn't talk just about the records that was mentioned previously, both in the quarter of 31.3% and for the full year of 30.1%, which I do think is a testament to how our team members focus and dedicate on this throughout the year. But as we look to 2026, we're calling for our fourth consecutive year of EBITDA margin expansion of 30 basis points at the midpoint, but as Jim just alluded to, 50 basis points on an adjusted basis. The biggest contributor to that is going to be from our collection and disposal business.
I guess this is the roll-in of the sustainability projects. So maybe you can help us a little bit around the quarterly cadence of margins at a high level and how to think about that.
David Reed: Sure. I'll give you some of the components. This is David. I'd be remiss if I didn't talk just about the records that was mentioned previously, both in the quarter of 31.3% and for the full year of 30.1%, which I do think is a testament to how our team members focus and dedicate on this throughout the year. But as we look to 2026, we're calling for our fourth consecutive year of EBITDA margin expansion of 30 basis points at the midpoint, but as Jim just alluded to, 50 basis points on an adjusted basis. The biggest contributor to that is going to be from our collection and disposal business.
Speaker #3: Sure. I'll give you some of the components. This is David. I'd be remiss if I didn't talk just about the records that was mentioned previously both in the quarter of 31.3% and for the full year of 30.1%, which I do think is a testament to how our team members focus and dedicate on this throughout the year.
The you know, the biggest contributor to that is going to be from our collection and Disposal business. So as we execute our pricing programs while continuing our strategies around operational excellence and leveraging our network. Uh that's a big piece. We also have some business mix um as as we've alluded to continue shedding of some lower margin residential business, relative to our volume growth, in the landfill line of business.
Speaker #3: But as we looked at 2026, we're calling for our fourth consecutive year of EBITDA margin expansion of 30 basis points at the midpoint. But as Jim just alluded to, 50 basis points on an adjusted basis the biggest contributor to that is going to be from our collection and disposal business.
And then on sustainability, there's about uh, 30 basis points, uh, collectively of of benefit in 26, in terms, in terms of the bridge. As we bring new plants online, we've got 4, recycling, facilities and 6, RNG facilities, coming online in 2026. There is a modest decline. In recycling commodity prices, uh, year-over-year that'll that'll have a minimal impact on margin and then Healthcare Solutions as we've been discussing, uh, will contribute to margin expansion.
Speaker #3: So as we execute our pricing programs, while continuing our strategies around operational excellence and leveraging our network, that's a big piece. We also have some business mix as we've alluded to, continued shedding of some lower margin residential business relative to our volume growth in the landfill line of business.
Edward Egl: So as we execute our pricing programs while continuing our strategies around operational excellence and leveraging our network, that's a big piece. We also have some business mix, as we've alluded to, continued shedding of some lower margin residential business relative to our volume growth in the landfill line of business. Then on sustainability, there's about 30 basis points collectively of benefit in 2026 in terms of the bridge. As we bring new plants online, we've got 4 recycling facilities and 6 RNG facilities coming online in 2026. There is a modest decline in recycling commodity prices year-over-year that'll have a minimal impact on margin.
So as we execute our pricing programs while continuing our strategies around operational excellence and leveraging our network, that's a big piece. We also have some business mix, as we've alluded to, continued shedding of some lower margin residential business relative to our volume growth in the landfill line of business. Then on sustainability, there's about 30 basis points collectively of benefit in 2026 in terms of the bridge. As we bring new plants online, we've got 4 recycling facilities and 6 RNG facilities coming online in 2026. There is a modest decline in recycling commodity prices year-over-year that'll have a minimal impact on margin.
Overall, for the year as we capitalize on our value capture opportunities, execute our pricing plan, uh, continue our cross-sell efforts, even though that'll show up most likely in in the CND business, and then continue to continue our progress on lowering our cost structure.
Speaker #3: And then on sustainability, there's about 30 basis points collectively of benefit in '26 in terms of the bridge. As we bring new plants online, we've got four recycling facilities and six R&G facilities coming online in 2026.
Historical averages.
Great. Thank you.
Thank you. Our next question. Coming from the line of atoms with Goldman Sachs. Yin is now open.
Speaker #3: There is a modest decline in recycling commodity prices year over year that'll have a minimal impact on margin. And then Healthcare Solutions, as we've been discussing, will contribute to margin expansion overall for the year as we capitalize on our value capture opportunities, execute our pricing plan, and continue our cross-sell efforts, even though that'll show up most likely in the C&D business.
Edward Egl: And then healthcare solutions, as we've been discussing, will contribute to margin expansion overall for the year as we capitalize on our value capture opportunities, execute our pricing plan, continue our cross-sell efforts, even though that'll show up most likely in the C&D business, and then continue our progress on lowering our cost structure. And then in terms of cadence throughout the year, it's call it 47% in the first half, 53% on the back half in terms of mix, but that's in line with our historical averages. Great. Thank you. Thank you. Our next question coming from the line of Adam Bubes with Goldman Sachs. Your line is now open. Hi. Good morning. Just had one more follow-up on margins. Really impressive in the quarter.
And then healthcare solutions, as we've been discussing, will contribute to margin expansion overall for the year as we capitalize on our value capture opportunities, execute our pricing plan, continue our cross-sell efforts, even though that'll show up most likely in the C&D business, and then continue our progress on lowering our cost structure. And then in terms of cadence throughout the year, it's call it 47% in the first half, 53% on the back half in terms of mix, but that's in line with our historical averages.
Hi, good morning, just had 1 more follow up on margins, you know, really impressive in the quarter and I think if you just compare your 4q margin prior, ex exit rates to where you typically ended the next year, it would sort of imply that this 4q exit rate points to potential for better than 30 basis points of margin expansion.
Speaker #3: And then continue our progress on lowering our cost structure. And then in terms of cadence throughout the year, it's call it 47% in the first half, 53% on the back half in terms of mix.
Speaker #3: But that's in line with our historical averages.
In 2026. So just wondering out of the 230 base points of margin expansion in this fourth quarter. How much of that expansion was maybe more 1 off? I I know you called out out the outside RN sales uh, that we're going to happen this quarter.
Faiza Alwy: Great. Thank you.
Speaker #4: Great. Thank you.
Operator: Thank you. Our next question coming from the line of Adam Bubes with Goldman Sachs. Your line is now open.
Speaker #1: Thank you. Our next question is coming from the lineup. Adam, just with Goldman Sachs, your line is now open.
Speaker #1: open. Hi, good
Operator: Hi. Good morning. Just had one more follow-up on margins. Really impressive in the quarter.
Speaker #5: Morning. Just had one more follow-up on margins. Really impressive in the quarter. And I think if you just compare your Q4 margin prior exit rates to where you typically ended the next year, it would sort of imply that this Q4 exit rate points to potential for better than 30 basis points of margin expansion.
Edward Egl: I think if you just compare your Q4 margin prior exit rates to where you typically ended the next year, it would sort of imply that this Q4 exit rate points to potential for better than 30 basis points of margin expansion in 2026. So just wondering, out of the 230 basis points of margin expansion in this fourth quarter, how much of that expansion was maybe more one-off? I know you called out the outsized RIN sales that were going to happen this quarter. I think for the most part, these are sustained initiatives that we've been executing on, and it just highlights our focus on disciplined cost management. And so we're just seeing it come to fruition.
I think if you just compare your Q4 margin prior exit rates to where you typically ended the next year, it would sort of imply that this Q4 exit rate points to potential for better than 30 basis points of margin expansion in 2026. So just wondering, out of the 230 basis points of margin expansion in this fourth quarter, how much of that expansion was maybe more one-off? I know you called out the outsized RIN sales that were going to happen this quarter.
Um, I I I I I think for the most part, these are sustained, um, initiatives that we've been executing on, and it's just highlights our focus on discipline costs management. And so, we're just seeing it come to fruition. And I think as Jim alluded to, with, with the volume, uh, you know, some of it, which we can't control, like, just the ability of the, of the business to flex accordingly, um, in in the environment that we're operating in, it allows us to, uh, maintain and sustain that margin going forward. So, so for for most of it, I think we can carry that carry that forward. Um, versus, you know, a number of 1 offs that that was, you know, idiosyncratic to that to the quarter.
Speaker #5: In 2026, so just wondering, out of the 230 basis points of margin expansion in this fourth quarter, how much of that expansion was maybe more one-off?
so I'm probably going to make his point form here but uh, but I 1 thing we haven't really talked too much about is the fact that if you if you look at our core price for next year, 5.6%,
Speaker #5: I know you called out the outsized RIN sales that were going to happen this
Speaker #5: quarter. I think for the most
It's a 250 basis, point Delta, and we typically have gotten this question, so we haven't gotten it yet today, but a 250 basis point, Delta to our forecasting cost inflation.
Jim Fish: I think for the most part, these are sustained initiatives that we've been executing on, and it just highlights our focus on disciplined cost management. And so we're just seeing it come to fruition.
Speaker #3: In part, these are sustained initiatives that we've been executing on, and it just highlights our focus on disciplined cost management. And so we're just seeing it come to fruition.
Speaker #3: I think, as Jim alluded to with the volume, some of it—which we can't control—like just the ability of the business to flex accordingly in the environment that we're operating in, allows us to maintain and sustain that margin going forward.
Edward Egl: I think, as Jim alluded to with the volume, some of it, which we can't control, like just the ability of the business to flex accordingly in the environment that we're operating in, it allows us to maintain and sustain that margin going forward. So for most of it, I think we can carry that forward versus a number of one-offs that were idiosyncratic to the quarter. So I'm probably going to make his point for him here, but one thing we haven't really talked too much about is the fact that if you look at our core price for next year, 5.6%, it's a 250 basis point delta. And we typically have gotten this question, so we haven't gotten it yet today, but a 250 basis point delta to our forecasted cost inflation.
I think, as Jim alluded to with the volume, some of it, which we can't control, like just the ability of the business to flex accordingly in the environment that we're operating in, it allows us to maintain and sustain that margin going forward. So for most of it, I think we can carry that forward versus a number of one-offs that were idiosyncratic to the quarter.
I I don't know how that measures up historically but it's got to be 1 of the bigger ones, uh, you know, for us. So I'm kind of making your point for you, but but still we we do think that 30 basis points is, is reasonable, considering the 20 basis points of, uh, of headwind from the fire volume. So, um, you know, that's what that's where we came out.
Speaker #3: So for most of it, I think we can carry that forward, versus a number of one-offs that were idiosyncratic to—
Speaker #3: the quarter. So
John Morris: So I'm probably going to make his point for him here, but one thing we haven't really talked too much about is the fact that if you look at our core price for next year, 5.6%, it's a 250 basis point delta. And we typically have gotten this question, so we haven't gotten it yet today, but a 250 basis point delta to our forecasted cost inflation.
Speaker #2: I'm probably going to make his point form here, but one thing we haven't really talked too much about is the fact that if you look at our core price for next year, 5.6%, it's a 250 basis point delta.
Terrific. And and then on the landfill gas side. Um, can you just update us on? Voluntary offtake, discuss discussions. I think eventually 50% of your production, uh, will will go into voluntary market. So what's your confidence level that that 50% will be absorbed by those markets and how are those discussions going?
Speaker #2: And we typically have gotten this question, so we haven't gotten it yet today. But a 250 basis point delta to our forecasted cost inflation.
Speaker #2: I don't know how that measures up historically, but it's got to be one of the bigger ones for us. So I'm kind of making your point for you, but still, we do think that 30 basis points is reasonable, considering the 20 basis points of headwind from the fire volume.
Edward Egl: I don't know how that measures up historically, but it's got to be one of the bigger ones for us. So I'm kind of making your point for you, but still, we do think that 30 basis points is reasonable considering the 20 basis points of headwind from the fire volume. So that's where we came out. Terrific. Then on the landfill gas side, can you just update us on voluntary offtake discussions? I think eventually 50% of your production will go into voluntary markets. So what's your confidence level that that 50% will be absorbed by those markets, and how are those discussions going? We're confident that we'll be able to absorb that in the voluntary market. While the US market right now is a bit softer than it had been, there are other markets that are strong.
I don't know how that measures up historically, but it's got to be one of the bigger ones for us. So I'm kind of making your point for you, but still, we do think that 30 basis points is reasonable considering the 20 basis points of headwind from the fire volume. So that's where we came out.
We're confident that we'll be able to absorb that in the voluntary Market, while the, the US market right now is a bit softer than it had been. There are other markets that are strong. If you look at Canada, the UK and, um, some other International markets were able to tap into those as well and then still in dialogue with some larger.
Speaker #2: So that's where we came out.
Adam Bubes: Terrific. Then on the landfill gas side, can you just update us on voluntary offtake discussions? I think eventually 50% of your production will go into voluntary markets. So what's your confidence level that that 50% will be absorbed by those markets, and how are those discussions going?
Speaker #5: Terrific. And then on the landfill gas side, can you just update us on voluntary offtake discussions? I think eventually 50% of your production will go into voluntary market.
Uh, utility companies across the us as their public utility commissions passed their their rulemaking and that should free up more of the voluntary Market in the future.
Great. Thanks so much.
Speaker #5: So, what's your confidence level that that 50 percent will be absorbed by those markets, and how are those discussions?
Thank you. Our next question coming from the lineup, know? Okay, with Oppenheimer, your line is now open.
Speaker #5: going? We're
Tara Hemmer: We're confident that we'll be able to absorb that in the voluntary market. While the US market right now is a bit softer than it had been, there are other markets that are strong.
Speaker #4: confident that we'll be able to absorb that in the voluntary market while the US market right now is a bit softer than it had been.
Good morning. Thanks for taking the questions. Hey, I'm sorry to, um,
Speaker #4: There are other markets that are strong. If you look at Canada, the UK, and some other international markets, we're able to tap into those as well.
Edward Egl: If you look at Canada, the UK, and some other international markets, we're able to tap into those as well. Then still in dialogue with some larger utility companies across the US, as their public utility commissions pass their rulemaking, that that should free up more of the voluntary market in the future. Great. Thanks so much. Thanks. Thank you. Our next question coming from the line of Noah Kaye with Oppenheimer. Your line is now open. Good morning. Thanks for taking the questions. I'm sorry to beat the margin math, hopefully not to death here, but I'm a little confused. So the walk here is 50 bips on an adjusted basis x wildfires. But I think you said that sustainability was maybe 30 bips benefit in the bridge.
If you look at Canada, the UK, and some other international markets, we're able to tap into those as well. Then still in dialogue with some larger utility companies across the US, as their public utility commissions pass their rulemaking, that that should free up more of the voluntary market in the future.
Speaker #4: And then still in dialogue with some larger utility companies across the US as their public utility commissions pass their rulemaking that that should free up more of the voluntary market in the
Speaker #4: future. Great.
Adam Bubes: Great. Thanks so much.
Speaker #5: Thanks so
Speaker #5: much. Thanks.
Tara Hemmer: Thanks.
Noah Kaye: Thank you. Our next question coming from the line of Noah Kaye with Oppenheimer. Your line is now open.
Speaker #1: Thank you. Now our next question is coming from the lineup. Now, okay, with Oppenheimer, your line is now open.
Beat the margin math. Uh, hopefully not to death here, but just I'm a little confused. Uh, so the the, the walk here is 50 bips on an adjusted basis X wildfires. But I think you said that sustainability was maybe 30 bips benefit in the bridge and then, uh, you know, I would think just with the synergies capture on Healthcare and the pricing, you know, that has to be another, you know, 1020 bits or so at least. Um, so so what am I missing here? Because it seems like collection and disposal is going to be positive based off of what, you know, Jim. And Dave just said, um, just trying to understand what moving pieces, there are that we're not accounting for.
Good morning. Thanks for taking the questions. I'm sorry to beat the margin math, hopefully not to death here, but I'm a little confused. So the walk here is 50 bips on an adjusted basis x wildfires. But I think you said that sustainability was maybe 30 bips benefit in the bridge.
Speaker #6: Good morning. Thanks for taking the questions. I'm sorry to beat the margin math—hopefully not to death here—but I'm a little confused.
Speaker #6: So the walk here is 50 bips on an adjusted basis X wildfires. But I think you said that sustainability was maybe 30 bips benefit in the bridge.
Yeah, there's there's some um there's some normalization of certain expenses and corporate and other that that we've baked into the to the guide. Um those may or may not materialize but but just we felt prudent just based on on how we finish the year to, to adjust for that. There's also some some technology costs that show up in there that are for the benefit of other parts of the uh of the organization. And so that that's that's offsetting some of the uh the points that you're highlighting.
Speaker #6: And then I would think just with the synergies capture on healthcare and the pricing, that has to be another 10, 20 bips or so, at least.
Edward Egl: And then I would think just with the synergies capture on healthcare and the pricing, that has to be another 10, 20 bips or so, at least. So what am I missing here? Because it seems like collection and disposal is going to be positive based off of what Jim and Dave just said. Just trying to understand what moving pieces there are that we're not accounting for. Yeah. There's some normalization of certain expenses incorporated in other that we've baked into the guide. Those may or may not materialize, but we felt prudent just based on how we finished the year to adjust for that. There's also some technology costs that show up in there that are for the benefit of other parts of the organization. And so that's offsetting some of the points that you're highlighting. Okay. That's helpful. Thanks.
And then I would think just with the synergies capture on healthcare and the pricing, that has to be another 10, 20 bips or so, at least. So what am I missing here? Because it seems like collection and disposal is going to be positive based off of what Jim and Dave just said. Just trying to understand what moving pieces there are that we're not accounting for.
Okay, that that's helpful. Thanks and then um, just just a quick 1 on the recycling Outlook um,
Speaker #6: So, what am I missing here? Because it seems like collection and disposal is going to be positive based off of what Jim and Dave just said. I'm just trying to understand what moving pieces there are that we're not accounting for.
you know, the basket was $62 a ton in 4 q and um I I think we're going to maybe add or slightly below that maybe you can update us but just um
26, can you help us understand that?
Jim Fish: Yeah. There's some normalization of certain expenses incorporated in other that we've baked into the guide. Those may or may not materialize, but we felt prudent just based on how we finished the year to adjust for that. There's also some technology costs that show up in there that are for the benefit of other parts of the organization. And so that's offsetting some of the points that you're highlighting.
2026.
Speaker #3: Yeah, there’s some normalization of certain expenses in Corporate and Other that we’ve baked into the guide. Those may or may not materialize, but we just felt it was prudent, based on how we finished the year, to adjust for that.
Speaker #3: There are also some technology costs that show up in there that are for the benefit of other parts of the organization, and so that's offsetting some of the points that you're highlighting.
2025 at $22, a ton? What? We're anticipating for. The first half is in that 60 to 65 dollar range and then it ramping the back half of the Year. Why is that? Well, what we're starting to see is a little bit of green shoots on the the fiber side.
Noah Kaye: Okay. That's helpful. Thanks.
Speaker #5: Okay, that's helpful, thanks. And then just a quick one on the recycling outlook. The basket was $60 a ton in Q4, and I think we're going to maybe end at or slightly below that.
Edward Egl: Then just a quick one on the recycling outlook. The basket was $62 a ton in Q4, and I think we're going to maybe add or slightly below that. Maybe you can update us. But just the thought around the $70 per ton outlook for 2026, can you help us understand that? So 2026, the way to look at it is a first half, second half story. And so exiting 2025 at $62 a ton, what we're anticipating for the first half is in that $60 to $65 range, and then it ramping the back half of the year. Why is that? Well, what we're starting to see is a little bit of green shoots on the fiber side. The headlines previously were that a lot of capacity had been taken out of the US market, which is true. That was more inefficient mill capacity.
Then just a quick one on the recycling outlook. The basket was $62 a ton in Q4, and I think we're going to maybe add or slightly below that. Maybe you can update us. But just the thought around the $70 per ton outlook for 2026, can you help us understand that?
Speaker #5: Maybe you can update us. But just the thought around the $70 per ton outlook for 2016, help us understand that.
Tara Hemmer: So 2026, the way to look at it is a first half, second half story. And so exiting 2025 at $62 a ton, what we're anticipating for the first half is in that $60 to $65 range, and then it ramping the back half of the year. Why is that? Well, what we're starting to see is a little bit of green shoots on the fiber side. The headlines previously were that a lot of capacity had been taken out of the US market, which is true. That was more inefficient mill capacity.
Speaker #4: So 2026, the way to look at it is the first half, second half story. And so exiting 2025 at $62 a ton, what we're anticipating for the first half is in that 60 to 65 dollar range.
The headlines. Previously, were that a lot of capacity had been taken out of the US market, which is true, that was more inefficient, milk capacity, but the larger Mills that remain are going to be looking for material. Some of the head, the the cloud around tariffs has been lifted, so we're anticipating that. OCC prices. Should bounce back a bit in the back, half of the Year. We're not expecting any material movement. On plastic pricing, moving forward.
Got it. Thank you Tara. I'll leave you there.
Thank you.
Our next question, coming from the line of James shum with TV, Colin Neil and is Nelson.
Speaker #4: And then it's ramping in the back half of the year. Why is that? Well, what we're starting to see is a little bit of green shoots on the fiber side.
Speaker #4: The headlines previously were that a lot of capacity had been taken out of the US market, which is true. That was more inefficient mill capacity.
Hey, good morning guys. Um for WM Healthcare. Can you give us the revenue split between document destruction and medical waste? And and then maybe give some color on document destruction profitability and and whether you see this as a core business for you, going forward
Speaker #4: But the larger mills that remain are going to be looking for material. Some of the cloud around tariffs has been lifted, so we're anticipating that OCC prices should bounce back a bit in the back half of the year.
Edward Egl: But the larger mills that remain are going to be looking for material. Some of the cloud around tariffs has been lifted. So we're anticipating that OCC prices should bounce back a bit in the back half of the year. We're not expecting any material movement on plastic pricing moving forward. Got it. Thank you, Tara. I'll leave it there. Thank you. Our next question coming from the line of James Schumm with TD Cowen. Your line is now open. Hey. Good morning, guys. For WM Healthcare, can you give us the revenue split between document destruction and medical waste? And then maybe give some color on document destruction profitability and whether you see this as a core business for you going forward. So James, I think the answer to the question is about two-thirds, one-third between healthcare and the document destruction business.
But the larger mills that remain are going to be looking for material. Some of the cloud around tariffs has been lifted. So we're anticipating that OCC prices should bounce back a bit in the back half of the year. We're not expecting any material movement on plastic pricing moving forward.
So James, I think to answer the question is about 2/3 1/3, uh, between Healthcare and the document destruction business and then sorry. Could you repeat the second part of the question? I
Speaker #4: We're not expecting any material movement on plastic pricing moving forward.
Yeah sure just uh in terms of like the the profitability and document destruction any color there. Um
Noah Kaye: Got it. Thank you, Tara. I'll leave it there.
Speaker #5: Got it. Thank you, Tara. I'll leave it
Speaker #5: there. Thank
Operator: Thank you. Our next question coming from the line of James Schumm with TD Cowen. Your line is now open.
Speaker #1: you. Our next question coming from the lineup. James Shum with TD Cowan, your line is now
Speaker #1: You. Our next question, coming from the lineup, James Shum with TD Cowan—your line is now open. Hey, good morning,
Yeah, I think you talked about in the past that, that, you know, maybe you had a an advantage here with your recycling business, maybe you got better uh, paper pricing. Um, but you know, do you see this as a core business going forward?
James Schumm: Hey. Good morning, guys. For WM Healthcare, can you give us the revenue split between document destruction and medical waste? And then maybe give some color on document destruction profitability and whether you see this as a core business for you going forward.
Speaker #5: guys. For WM Healthcare, can you give us the revenue split between document destruction and medical waste? And then maybe give some color on document destruction profitability and whether you see this as a core business for you going
Speaker #5: forward. So James, I
John Morris: So James, I think the answer to the question is about two-thirds, one-third between healthcare and the document destruction business.
Speaker #2: I think to answer the question, it's about two-thirds, one-third between healthcare and document destruction business. And then, sorry, could you repeat the second part of the—
Edward Egl: And then, sorry, could you repeat the second part of the question? Yeah, sure. Just in terms of the profitability and document destruction, any color there? I think you talked about in the past that maybe you had an advantage here with your recycling business. Maybe you got better paper pricing. But do you see this as a core business going forward? Yeah. I mean, first, to start on the recycling side, I mean, it's interesting. Both of those businesses are collection, disposal, and/or processing businesses, right? And I think you heard some of that commentary from us earlier. So from that perspective, it lays nicely over whether it's on the SID side or on the healthcare side to what we see as some of our core competencies.
And then, sorry, could you repeat the second part of the question?
Speaker #2: question? Yeah, sure.
James Schumm: Yeah, sure. Just in terms of the profitability and document destruction, any color there? I think you talked about in the past that maybe you had an advantage here with your recycling business. Maybe you got better paper pricing. But do you see this as a core business going forward?
Speaker #5: Just in terms of the profitability and document destruction, any color there? I think you talked about in the past that maybe you had an advantage here with your recycling business.
Yeah, I mean, I first started on the recycling side, I mean, it's interesting both of those businesses are collection disposal into our processing businesses, right? And I think you heard some of that commentary from us earlier. Um, so from that perspective, it lays it lays nicely over, whether it's on the Sid side or on the healthcare side. To what we, what we see, as some of our core competencies the commodity side of it. I mean, Tara spoke to what we're going to see from a commodity side and probably some more green shoots on the fiber side and the 26 which which certainly benefit that business and then when you look at the the healthcare side, it's it is a collection and Disposal and processing business. Uh, and Jim gave a good
Speaker #5: Maybe you got better paper pricing. But do you see this as a core business going forward?
John Morris: Yeah. I mean, first, to start on the recycling side, I mean, it's interesting. Both of those businesses are collection, disposal, and/or processing businesses, right? And I think you heard some of that commentary from us earlier. So from that perspective, it lays nicely over whether it's on the SID side or on the healthcare side to what we see as some of our core competencies.
Speaker #2: Yeah. I mean, first, to start on the recycling side—I mean, it's interesting, both of those businesses are collection, disposal, and/or processing businesses, right?
Speaker #2: And I think you heard some of that commentary from us earlier. So from that perspective, it lays nicely over whether it's on the SID side or on the healthcare side to what we see as some of our core competencies.
A bit of commentary on where we're at. I would tell you that the integration into the areas which is just occurred over the last called 120 days, I think is going to be a great platform for us to continue to drive some real expansion margins. Now that our field leadership teams have, uh, have sort of a full purview of the business at the local level, which not just similar to the WM Core Business. There's a lot of elements of this from an operating perspective that are local. So we're excited about what we're hearing from the teams and Jim mentioned. We just had our quarterly business reviews last week and got a lot of good commentary, and a lot of positive commentary on where that business is going.
Speaker #2: The commodity side of it, I mean, Tara spoke to what we're going to see. From a commodity side and probably some more green shoots on the fiber side in the 26, which certainly benefit that business.
Edward Egl: The commodity side of it, I mean, Tara spoke to what we're going to see from a commodity side, and probably some more green shoots on the fiber side in the 2026, which certainly benefit that business. And then when you look at the healthcare side, it is a collection and disposal and processing business. And Jim gave a good bit of commentary on where we're at. I would tell you that the integration into the areas, which has just occurred over the last, call it, 120 days, I think is going to be a great platform for us to continue to drive some real expansion in margins now that our field leadership teams have sort of a full purview of the business at the local level, which, not dissimilar to the WM core business, there's a lot of elements of this from an operating perspective that are local.
The commodity side of it, I mean, Tara spoke to what we're going to see from a commodity side, and probably some more green shoots on the fiber side in the 2026, which certainly benefit that business. And then when you look at the healthcare side, it is a collection and disposal and processing business. And Jim gave a good bit of commentary on where we're at. I would tell you that the integration into the areas, which has just occurred over the last, call it, 120 days, I think is going to be a great platform for us to continue to drive some real expansion in margins now that our field leadership teams have sort of a full purview of the business at the local level, which, not dissimilar to the WM core business, there's a lot of elements of this from an operating perspective that are local.
Speaker #2: And then, when you look at the healthcare side, it is a collection, disposal, and processing business. And Jim gave a good bit of commentary on where we're at.
Speaker #2: I would tell you that the integration into the areas, which is just occurred over the last call, 120 days, I think is going to be a great platform for us to continue to drive some real expansion in margins now that our field leadership teams have sort of a full purview of the business at the local level, which not dissimilar to the WM core business.
Okay, great, thanks John. And then, you know, Jim kind of touched on this, but collection and Disposal core price in 2026 is expected to be, like, 5.6% at the midpoint, which seems, uh, very conservative off of 2025, 6.3% level. Um, so just curious, like, what was the customer Churn number in Q4? And what do you see as the right number for, for churn?
Speaker #2: There's a lot of elements of this from an operating perspective that are local. So we're excited about what we're hearing from the teams and Jim mentioned we just had our quarterly business reviews last week and got a lot of good commentary and a lot of positive commentary on where that business is
Edward Egl: So we're excited about what we're hearing from the teams. And Jim mentioned we just had our quarterly business reviews last week and got a lot of good commentary and a lot of positive commentary on where that business is going. Okay. Great. Thanks, John. And then Jim kind of touched on this, but Collection and Disposal core price in 2026 is expected to be like 5.6% at the midpoint, which seems very conservative off of 2025, 6.3% level. So just curious, what was the customer churn number in Q4, and what do you see as the right number for churn? What do you tell us? Yeah. We see that obviously bounce around a little bit quarter to quarter for a litany of different reasons.
So we're excited about what we're hearing from the teams. And Jim mentioned we just had our quarterly business reviews last week and got a lot of good commentary and a lot of positive commentary on where that business is going.
Speaker #2: going. Okay, great.
James Schumm: Okay. Great. Thanks, John. And then Jim kind of touched on this, but Collection and Disposal core price in 2026 is expected to be like 5.6% at the midpoint, which seems very conservative off of 2025, 6.3% level. So just curious, what was the customer churn number in Q4, and what do you see as the right number for churn? What do you tell us?
Speaker #5: Thanks, John. And then Jim kind of touched on this, but collection and disposal core price in 2026 is expected to be like 5.6% at the midpoint, which seems very conservative off of 2025, 6.3% level.
What are you doing? Yeah, we see quarter. We see that obviously bounce around a little bit quarter to quarter for a Litany of different reasons, but we've talked about churn being in and around that 10% range and we're still bouncing around in that range. Although it varies from quarter to quarter and you've heard us come in at times, it's been as low as 8 and change. It's been a little bit as high as 11, but when you stretch the tape out that 10-ish percent, sure number is is kind of what we, what we anchor on uh in terms of the price side.
Speaker #5: customer churn number in So just curious, what was the Q4 and what do you see is the right number for
Speaker #5: Churn? What do you tell us? Yeah, we—
John Morris: Yeah. We see that obviously bounce around a little bit quarter to quarter for a litany of different reasons.
Speaker #2: see that obviously bounce around a little bit quarter to quarter for a litany of different reasons, but we've talked about churn being in and around that 10% range.
Edward Egl: But we've talked about churn being in and around that 10% range, and we're still bouncing around in that range, although it varies from quarter to quarter. And you've heard us comment at times it's been as low as 8 and change. It's been a little bit as high as 11. But when you stretch the tape out, that 10-ish% churn number is kind of what we anchor on. In terms of the price side, when we talk about core price and yield and the conversion, obviously, that number's bounced around. It's been the high 50s% to high 60s%. But I think what I would point to is when we break it down by line of business and the margin profile of those businesses, what you're seeing is our operating expense under 59% in Q4, under 60% for the full year.
But we've talked about churn being in and around that 10% range, and we're still bouncing around in that range, although it varies from quarter to quarter. And you've heard us comment at times it's been as low as 8 and change. It's been a little bit as high as 11. But when you stretch the tape out, that 10-ish% churn number is kind of what we anchor on. In terms of the price side, when we talk about core price and yield and the conversion, obviously, that number's bounced around. It's been the high 50s% to high 60s%. But I think what I would point to is when we break it down by line of business and the margin profile of those businesses, what you're seeing is our operating expense under 59% in Q4, under 60% for the full year.
Speaker #2: And we're still bouncing around in that range, although it varies from quarter to quarter. And you've heard us comment at times it's been as low as 8 and change.
You know, I when we take about core price and yield and the conversion obviously that number is bounced around. It's been the high 50s to high 60s. But I think what I would point to is when we break it down by line of business and the margin profile of those businesses, what you're seeing is our operating expense under 59% in Q4 under 60 for the full year. So that's showing that we're making progress on on the middle of the p&l. And then we look at that relative to, you know, customer lifetime value. And what's the long term perspective on pricing? That we should take with each of those individuals customer segments. And I think you're seeing it translate to all-time high margins. I mean the collection and Disposal business was 39%, which I think that's an all-time high as well.
Speaker #2: It's been a little bit as high as 11, but when you stretch the tape out, that 10-ish percent churn number is kind of what we anchor on.
Speaker #2: In terms of the price side, when we take about core price and yield and the conversion, obviously that number is bounced around. It's been the high 50s to high 60s.
Because you mentioned, you you thought, maybe 5, 6 town of conservative. Keep in mind that that, uh, as as CPI or some of these indexes come down. Uh, we've talked about this many times on Thursday, lag in those index, uh, based price increases that we can take.
Speaker #2: But I think what I would point to is when we break it down by line of business and the margin profile of those businesses, what you're seeing is our operating expense under 59% in Q4, under 60 for the full year.
Speaker #2: So that's showing that we're making progress on the middle of the P&L. And then we look at that relative to customer lifetime value and what's the long-term perspective on pricing that we should take with each of those individual customer segments.
Edward Egl: So that's showing that we're making progress on the middle of the P&L. Then we look at that relative to customer lifetime value and what's the long-term perspective on pricing that we should take with each of those individual customer segments. And I think you're seeing it translate to all-time high margins. I mean, the collection and disposal business was 39%, which I think that's an all-time high as well. Maybe one last point here on pricing, James. As you mentioned, you've done maybe 5, 6 times conservative. Keep in mind that as CPI or some of these indexes come down, we've talked about this many times, but there is a lag in those index-based price increases that we can take, largely on the resi side of the business, but sometimes on other lines of business as well. And so that lag can be up to 6 months.
So that's showing that we're making progress on the middle of the P&L. Then we look at that relative to customer lifetime value and what's the long-term perspective on pricing that we should take with each of those individual customer segments. And I think you're seeing it translate to all-time high margins. I mean, the collection and disposal business was 39%, which I think that's an all-time high as well.
Largely on the resi side of the business, but sometimes on on other lines of business as well. And so that lag can be up to 6 months. And so we do expect that as CPI has come down throughout 2025, that we will see a bit of a lag there that will negatively impact 2026 pricing.
Speaker #2: And I think you're seeing it translate to all-time high margins. I mean, the collection and disposal business was 39%, which I think that's an all-time high
So uh that hence the the 5.6 as opposed to Something in the sixes for 2025, but as John just said, uh, look, we're we're we're certainly making up for that on the margin line.
Speaker #2: as well. Maybe one
Alright, thanks a lot guys. I appreciate the answers.
Jim Fish: Maybe one last point here on pricing, James. As you mentioned, you've done maybe 5, 6 times conservative. Keep in mind that as CPI or some of these indexes come down, we've talked about this many times, but there is a lag in those index-based price increases that we can take, largely on the resi side of the business, but sometimes on other lines of business as well. And so that lag can be up to 6 months.
Speaker #3: last point here on pricing, James. Because you mentioned that you thought maybe 5, 6 sounded conservative. Keep in mind that as CPI or some of these indexes come down, we've talked about this many times.
Thank you.
Our next question, coming from the line of Jerry. Riverwood Wells Fargo security. See you on the is now open.
Yes. Hi. Good morning everyone.
There. Jerry. Good morning.
Speaker #3: If there is a lag in those index-based price increases that we can take, largely on the resi side of the business, but sometimes on other lines of business as well.
Speaker #3: And so that lag can be up to six months. And so we do expect that as CPI has come down throughout 2025, we will see a bit of a lag there that will negatively impact 2026 pricing.
Edward Egl: And so we do expect that as CPI has come down throughout 2025, that we will see a bit of a lag there that will negatively impact 2026 pricing. So hence the 5.6 as opposed to something in the 6s for 2025. But as John just said, look, we're certainly making up for that on the margin line. Right. Thanks a lot, guys. I appreciate the answers. Thank you. Our next question coming from the line of Jerry Revich with Wells Fargo Security. Your line is now open. Yes, hi. Good morning, everyone. Jerry. Good morning. John, I wonder if we could just go back to your prepared remarks. You mentioned some benefits from Connected Truck and other tech. Can you just give us an update? Are you folks seeing an acceleration in terms of the savings that you're seeing from logistics management?
And so we do expect that as CPI has come down throughout 2025, that we will see a bit of a lag there that will negatively impact 2026 pricing. So hence the 5.6 as opposed to something in the 6s for 2025. But as John just said, look, we're certainly making up for that on the margin line.
Uh, John, I'm wondering if we could just go back to your prepared remarks. You you you mentioned some benefits from connected trucks and other Tech. Can you just give us an update? Are you folks seeing you in acceleration in terms of the savings that you're seeing from Logistics management? And obviously, you have the session with caterpillar at the consumer. Electronic show is is are the returns from your Tech Investments accelerating as we head into this year?
Speaker #3: So hence the 5.6 as opposed to something in the 6s for 2025. But as John just said, look, we're certainly making up for that on the margin
Speaker #3: line. Right.
James Schumm: Right. Thanks a lot, guys. I appreciate the answers.
Speaker #5: Thanks a lot, guys. I appreciate the answers.
Operator: Thank you. Our next question coming from the line of Jerry Revich with Wells Fargo Security. Your line is now open.
Speaker #1: Thank you. Our next question is coming from the lineup. Jerry Ribbage with Wells Fargo Securities, your line is now open.
Speaker #1: open. Yes, hi, good
Speaker #1: open. Yes, hi, good
Jerry Revich: Yes, hi. Good morning, everyone.
Speaker #6: Morning, everyone. There, Jerry. Good morning. John, I'm wondering if we could just go back to your prepared remarks. You mentioned some benefits from connected trucks and other tech.
Jim Fish: Jerry. Good morning.
Jerry Revich: John, I wonder if we could just go back to your prepared remarks. You mentioned some benefits from Connected Truck and other tech. Can you just give us an update? Are you folks seeing an acceleration in terms of the savings that you're seeing from logistics management?
Speaker #6: Can you just give us an update? Are you folks seeing an acceleration in terms of the savings that you're seeing from logistics management and obviously you had the session with Caterpillar at the Consumer Electronics Show?
Edward Egl: And obviously, you had the session with Caterpillar at the Consumer Electronics Show. Are the returns from your tech investments accelerating as we head into this year? Yeah. I think, Jerry, starting with Connected Truck, we've had that technology on all our commercial fleet for some time now. We've actually expanded that to the automated components of our residential business. So we still see that there's runway there. So we'll continue to build on that. And I think to your point about the I mentioned Connected Landfill and in particular the heavy equipment side, we see plenty of opportunity that we're starting to unpack with this Connected Landfill. There was a good bit of detail laid out at Investor Day about what that pathway looked like going forward.
And obviously, you had the session with Caterpillar at the Consumer Electronics Show. Are the returns from your tech investments accelerating as we head into this year?
Yeah, I think Jerry starting with the connected truck, we've had that technology on on all our commercial Fleet for some time. Now, we've actually expanded that to the automated components of our residential business. So, we still see that. There's, there's runaway there. So, we'll continue to build on that. And I think, to your point about the, I mentioned connected landfill in particular, the the heavy equipment side, we see plenty of opportunity that we're starting to unpack with this connected landfill. There was a good bit of detail laid out at investor day about what that pathway looked like, uh, going forward. So, if you think sort of uh late middle Innings on the on, uh, some of the connected truck elements that you mentioned, I'd say we're in the early Innings on the on the post collection side and see a lot of opportunity to drive costs out of that, out of that, part of the business as well.
Speaker #6: Are the returns from your tech investments accelerating as we head into this year?
John Morris: Yeah. I think, Jerry, starting with Connected Truck, we've had that technology on all our commercial fleet for some time now. We've actually expanded that to the automated components of our residential business. So we still see that there's runway there. So we'll continue to build on that. And I think to your point about the I mentioned Connected Landfill and in particular the heavy equipment side, we see plenty of opportunity that we're starting to unpack with this Connected Landfill. There was a good bit of detail laid out at Investor Day about what that pathway looked like going forward.
Speaker #2: Yeah, I think, Jerry, starting with Connected Truck, we've had that technology on all our commercial fleet for some time now. We've actually expanded that to the automated components of our residential business.
Speaker #2: So we still see that there's runway there. So we'll continue to build on that. And I think to your point about the, I mentioned connected landfill and in particular the heavy equipment side, we see plenty of opportunity that we're starting to unpack with this connected landfill.
Okay. Super and and then, you know, from a margin standpoint, it just really impressive performance over the course of 25. Even as recycling commodity prices got worse. So over the course of the year uh David I just want to make sure I'm not missing anything heading into the first quarter because Normal seasonality and the accounting change, you know implies that you're going to be at roughly I don't know the 30 and a half percent margins in the first quarter which which is typically your seasonally weakest margin quarter. So I just want to make sure there are no moving pieces off of the really strong.
Speaker #2: There was a good bit of detail laid out at Investor Day about what that pathway looked like. Going forward. So if you think sort of late, middle innings on some of the connected truck elements that you mentioned, I'd say we're in the early innings on the post-collection side and see a lot of opportunity to drive cost out of that part of the business as well.
Run rate that you folks have achieved as the year unfolded last year.
Edward Egl: So if you think sort of late, middle innings on some of the connected truck elements that you mentioned, I'd say we're in the early innings on the post-collection side and see a lot of opportunity to drive cost out of that part of the business as well. Okay. Super. And then from a margin standpoint, just really impressive performance over the course of 2025, even as recycling commodity prices got worse over the course of the year. David, I just want to make sure I'm not missing anything heading into Q1 because normal seasonality and the accounting change implies that you're going to be at roughly, I don't know, 30.5% margins in Q1, which is typically your seasonally weakest margin quarter.
So if you think sort of late, middle innings on some of the connected truck elements that you mentioned, I'd say we're in the early innings on the post-collection side and see a lot of opportunity to drive cost out of that part of the business as well.
Yeah, put I'm kind of thinking accretion aside, uh, Jerry to keep this kind of same store sales but you're right. Q1 is usually, uh, 1 of our softer quarters and I don't know, off the top of my head, whether that's the right number or not, feels a little bit High to me. I think it's a little lower than that, but I we we could Circle back with you to confirm.
Speaker #6: Okay. Super. And then from a margin standpoint, just really impressive performance over the course of '25, even as recycling commodity prices got worse. So over the course of the year, David, I just want to make sure I'm not missing anything heading into the first quarter because normal seasonality and the accounting change implies that you're going to be at roughly, I don't know, 30.5% margins in the first quarter, which is typically your seasonally weakest margin quarter.
Jerry Revich: Okay. Super. And then from a margin standpoint, just really impressive performance over the course of 2025, even as recycling commodity prices got worse over the course of the year. David, I just want to make sure I'm not missing anything heading into Q1 because normal seasonality and the accounting change implies that you're going to be at roughly, I don't know, 30.5% margins in Q1, which is typically your seasonally weakest margin quarter.
Good. Well, nice performance with the margin revisions consistently this in 2575.
Thank you.
Our next question coming from the lineup.
Speaker #6: So I just want to make sure there are no moving pieces off of the really strong run rate that you folks have achieved as the year unfolded last
Edward Egl: So I just want to make sure there are no moving pieces off of the really strong run rate that you folks have achieved as the year unfolded last year. Yeah. I'm kind of thinking accretion aside, Jerry, to keep this kind of same store sales. But you're right. Q1 is usually one of our softer quarters. And I don't know off the top of my head whether that's the right number or not. Feels a little bit high to me. I think it's a little lower than that, but we could circle back with you to confirm. Good. Well, nice performance with the margin revisions consistently in '25. Thanks, everyone. Thank you. Thank you. Our next question coming from the line of Konark Gupta with Scotiabank. Your line is now open. Thanks, everyone. Good morning, everyone. Just maybe one question on the top line.
So I just want to make sure there are no moving pieces off of the really strong run rate that you folks have achieved as the year unfolded last year.
Speaker #6: year. Yeah.
David Reed: Yeah. I'm kind of thinking accretion aside, Jerry, to keep this kind of same store sales. But you're right. Q1 is usually one of our softer quarters. And I don't know off the top of my head whether that's the right number or not. Feels a little bit high to me. I think it's a little lower than that, but we could circle back with you to confirm.
Speaker #2: I'm kind of thinking accretion aside, Jerry, to keep this kind of same store sales, but you're right. Q1 is usually one of our softer quarters.
Speaker #2: And I don't know off the top of my head whether that's the right number or not. It feels a little bit high to me.
Speaker #2: I think it's a little lower than that, but we could circle back with you to confirm.
Thanks Albert. Good morning everyone. Um, just maybe 1 question, uh, on the top line um for the full year, I guess you guys are expecting about 5% of the midpoint, uh, just looking at the puts and takes, uh, on the quarterly side, uh, you have probably 30 cyclists more like a second half story gym. I think you said and then, um, second quarter, You're Expecting or seeing maybe top coms from the Wildfire last year. Um, how should we think about the growth Cadence, uh, for for the Year by quarter? I mean, especially in terms of how the volumes kind of shake out on the C and D side.
Jerry Revich: Good. Well, nice performance with the margin revisions consistently in '25. Thanks, everyone.
Speaker #6: Good. Well, nice performance with the margin revisions consistently in '25. Thanks, everyone.
David Reed: Thank you.
Operator: Thank you. Our next question coming from the line of Konark Gupta with Scotiabank. Your line is now open.
Speaker #1: Thank you. Our next question is coming from the lineup. Conor Gupta with Scotiabank, your line is now open.
Yeah, I mean it's it's pretty balanced uh over the year. But you do see more of a pickup in the second half of the year. Um so so call it, um, kind of below 55% or below in the first half and then above that in the second half in terms of the revenue Bridge across the year.
Konark Gupta: Thanks, everyone. Good morning, everyone. Just maybe one question on the top line.
Speaker #7: Thanks everybody. Good morning, everyone. Just maybe one question on the top line. For the full year, I guess you guys are expecting about 5% at the midpoint.
And and the Q2 to your point is is the toughest comp with the Wildfire volumes.
Edward Egl: For the full year, you guys are expecting about 5% at the midpoint. Just looking at the puts and takes on the quarterly side, you have probably stereotyped it as more like a second-half story, Jim, I think you said. And then Q2, you're expecting or seeing maybe tough comps from the wildfire last year. How should we think about the growth cadence for the year by quarter? I mean, especially in terms of how the volumes kind of shake out on the C&D side. Yeah. I mean, it's pretty balanced over the year, but you do see more of a pickup in the second half of the year. So call it kind of below 5% or below in the first half and then above that in the second half in terms of the revenue bridge across the year.
For the full year, you guys are expecting about 5% at the midpoint. Just looking at the puts and takes on the quarterly side, you have probably stereotyped it as more like a second-half story, Jim, I think you said. And then Q2, you're expecting or seeing maybe tough comps from the wildfire last year. How should we think about the growth cadence for the year by quarter? I mean, especially in terms of how the volumes kind of shake out on the C&D side.
And the volumes, you expect that to be more evenly spread out throughout the year or it's going to be more skewed. The second after
Speaker #7: Just looking at the puts and takes, on the quarterly side, you have probably still recyclers more like a second-half story, Jim. I think you said.
Speaker #7: And then, in the second quarter, you're expecting or seeing maybe tough comps from the wildfire last year. How should we think about the growth cadence for the year by quarter?
Speaker #7: I mean, especially in terms of how the volumes kind of shake out on the C&D
Well, I think the 1 area that will stick out, is we mentioned our residential volumes been, you know, negative -4, plus percent print. And we see that rate of leading and by the end of the year, we should be right around 2%, maybe a little bit, south of that in Q4. So that will be, that will be a clear Tailwind to volume in the second half of the year.
Okay, thank you.
Speaker #7: side. Yeah.
Thank you.
Jim Fish: Yeah. I mean, it's pretty balanced over the year, but you do see more of a pickup in the second half of the year. So call it kind of below 5% or below in the first half and then above that in the second half in terms of the revenue bridge across the year.
Speaker #3: I mean, it's pretty balanced over the year, but you do see more of a pickup in the second half of the year. So, call it kind of below 5% or below in the first half, and then above that in the second half, in terms of the revenue bridge across the year.
Now, next question coming.
From the lineup, South Weber with BNP, Paribas the Line is now open.
Edward Egl: And the Q2, to your point, is the toughest comp with the wildfire volumes. And the volumes, you expect that to be more evenly spread out throughout the year, or it's going to be more skewed the second half too? Well, I think the one area that will stick out is we mentioned our residential volume's been negative 4+% print, and we see that ratably declining. And by the end of the year, we should be right around 2%, maybe a little bit south of that in Q4. So that will be a clear tailwind to volume in the second half of the year. Okay. Thank you. Thank you. And our next question coming from the line of Sean Weber with BNP Paribas. Your line is now open. Hey. Good morning, guys. Thanks for taking the question. Just wanted to go back to the healthcare cross-selling opportunity.
And the Q2, to your point, is the toughest comp with the wildfire volumes.
Speaker #3: And the Q2, to your point, is the toughest comp with the wildfire volumes.
Konark Gupta: And the volumes, you expect that to be more evenly spread out throughout the year, or it's going to be more skewed the second half too?
Speaker #7: And the volumes you expect that to be more evenly spread out throughout the year, or it's going to be more skewed the second half
Speaker #7: Too? Well, I think the one
John Morris: Well, I think the one area that will stick out is we mentioned our residential volume's been negative 4+% print, and we see that ratably declining. And by the end of the year, we should be right around 2%, maybe a little bit south of that in Q4. So that will be a clear tailwind to volume in the second half of the year.
Speaker #2: area that will stick out is we mentioned our residential volume has been negative 4 plus percent print. And we see that readily declining. And by the end of the year, we should be right around 2%, maybe a little bit south of that in Q4.
Just wanted to go back to the Health Care cross-selling opportunity. I think on the third quarter, call you guys mentioned that it's uh it's largely been focused on small and medium-sized customers. Um I wanted to see if that's still the case or if you're getting any better traction with the large Hospital networks at this point. Thanks.
I think this ultimately is going to end up being more of a large customer, uh,
Opportunity for us.
Speaker #2: So that will be a clear tailwind to volume in the second half of the
Speaker #2: So, that will be a clear tailwind to volume in the second half of the year. Okay.
Konark Gupta: Okay. Thank you.
Speaker #7: Thank you.
Operator: Thank you. And our next question coming from the line of Sean Weber with BNP Paribas. Your line is now open.
Speaker #1: Thank you. Question coming from our next lineup: Seth Weber with BNP Paribas. Field line is now.
Speaker #1: open. Hey, good
Seth Weber: Hey. Good morning, guys. Thanks for taking the question. Just wanted to go back to the healthcare cross-selling opportunity.
Speaker #2: Morning, guys. Thanks for taking the question. Just wanted to go back to the healthcare cross-selling opportunity. I think on the third quarter call, you guys mentioned that it's largely been focused on small and medium-sized customers.
Uh, we what we've heard from our folks, uh, on the sales side is is when they're going out and and talking to the decision makers at these, uh, customers typically, these large customers, it ends up being the same decision maker on Solid Waste as it is on uh on Healthcare waste. So that's a positive for us and the fact that we uh feel very good about the the services that we have now on both sides. Um,
Edward Egl: I think on the third quarter call, you guys mentioned that it's largely been focused on small and medium-sized customers. I wanted to see if that's still the case or if you're getting any better traction with the large hospital networks at this point. Thanks. I think this ultimately is going to end up being more of a large customer opportunity for us. What we've heard from our folks on the sales side is when they're going out and talking to the decision-makers at these customers, typically these large customers, it ends up being the same decision-maker on solid waste as it is on healthcare waste. So that's a positive for us. The fact that we feel very good about the services that we have now on both sides, that ends up being good for us.
I think on the third quarter call, you guys mentioned that it's largely been focused on small and medium-sized customers. I wanted to see if that's still the case or if you're getting any better traction with the large hospital networks at this point. Thanks.
Speaker #2: I wanted to see if that's still the case, or if you're getting any better traction with the large hospital networks at this point. Thanks.
That ends up being good for us. I I do think it's going to be more of our, we've stratified our customers, the A's through FS by size and so you you can imagine the asb's and C's are the bigger ones. I think this is going to be more of an ABC thing than it is at the end.
John Morris: I think this ultimately is going to end up being more of a large customer opportunity for us. What we've heard from our folks on the sales side is when they're going out and talking to the decision-makers at these customers, typically these large customers, it ends up being the same decision-maker on solid waste as it is on healthcare waste. So that's a positive for us. The fact that we feel very good about the services that we have now on both sides, that ends up being good for us.
Speaker #3: I think this ultimately is going to end up being more of a large customer opportunity for us. What we've heard from our folks on the sales side is, when they're going out and talking to the decision makers at these customers—typically these large customers—it ends up being the same decision maker on solid waste as it is on healthcare waste.
Got it. Okay, um and then kind of related questions just can you update us on your national accounts business just across the whole company? It's been sort of low double digit kegger over the last few years. Is that still
You know, kind of running at that same improving at that same level.
Speaker #3: So that's a positive for us. And the fact that we feel very good about the services that we have now on both sides that ends up being good for us.
Speaker #3: I do think it's going to be more of our—we've stratified our customers, the A's through F's, by size. And so you can imagine the A's, B's, and C's are the bigger ones.
Edward Egl: I do think it's going to be more of our we've stratified our customers, the A's through F's by size. And so you can imagine the A's, B's, and C's are the bigger ones. I think this is going to be more of an A, B, C thing than it is at the EF thing. Got it. Okay. And then kind of related question. Just can you update us on your national accounts business just across the whole company? It's been sort of low double-digit CAGR for the last few years. Is that still kind of running at that same improving at that same level in 2025? I mean, look, I would tell you national accounts has been one of our real success stories.
I do think it's going to be more of our we've stratified our customers, the A's through F's by size. And so you can imagine the A's, B's, and C's are the bigger ones. I think this is going to be more of an A, B, C thing than it is at the EF thing.
Speaker #3: I think this is going to be more of an A, B, C thing than it is at the E, F thing.
2025 house has been. Uh, I mean, look, I would tell you National Council has been 1 of 1 of our real success stories and, uh, both on the volume side. But also on the price side, I think we've done well with, uh, with getting price increases based on, uh, really differentiated service and differentiated uh, uh, data and analytics that we provide our customers. So, we're real pleased with, uh, with the results of national accounts. I mean, gosh, that I would tell you a decade ago, national accounts was, was kind of a mess for us. And, and today, it's it is, uh, 1 of our success stories.
Seth Weber: Got it. Okay. And then kind of related question. Just can you update us on your national accounts business just across the whole company? It's been sort of low double-digit CAGR for the last few years. Is that still kind of running at that same improving at that same level in 2025?
Speaker #2: Got it. Okay. And then, kind of a related question: can you update us on your national accounts business just across the whole company? It's been sort of low double-digit CAGR for the last few years.
Okay. Thank you, guys. Appreciate it.
Thank you. Our next question, coming from the line of slowmo, rest and bomb with Steve. Your line is now open.
Speaker #2: Is that still kind of running at that same—improving at that same level?
Speaker #2: 2025? Yeah.
John Morris: I mean, look, I would tell you national accounts has been one of our real success stories.
Speaker #3: I mean, look, I would tell you, national accounts has been one of our real success stories, both on the volume side, but also on the price side.
Edward Egl: And both on the volume side, but also on the price side, I think we've done well with getting price increases based on really differentiated service and differentiated data and analytics that we provide our customers. So we're real pleased with the results of national accounts. I mean, gosh, I would tell you that a decade ago, national accounts was kind of a mess for us. And today, it is one of our success stories. Okay. Thank you, guys. Appreciate it. Thank you. Our next question coming from the line of Shlomo Rosenbaum with Stifel. Your line is now open. Hi. Thank you very much for taking my questions. I want to jump back to what you started kind of the questioning with on the call, just in terms of the healthy economy. And you said that things are looking, you say, not cautiously optimistic, just optimistic.
And both on the volume side, but also on the price side, I think we've done well with getting price increases based on really differentiated service and differentiated data and analytics that we provide our customers. So we're real pleased with the results of national accounts. I mean, gosh, I would tell you that a decade ago, national accounts was kind of a mess for us. And today, it is one of our success stories.
Speaker #3: I think we've done well with getting price increases based on really differentiated service and differentiated data and analytics that we provide our customers. So we're real pleased with the results of national accounts.
Speaker #3: I mean, gosh, I would tell you a decade ago, national accounts was kind of a mess for us. And today, it is one of our success
Hi, thank you very much for taking my questions. I want to jump back to what you started. Uh, kind of the questioning with on the call, just in terms of the health economy and you said that it's uh, things are looking you say not cautiously optimistic. Just optimistic. Can you give us just delve in a little bit more into some of the like, the the metrics on that? You know, as the service interval Trends? What are you seeing on scale report on some of the mature routes um and then you know residential also skill reports in the trucks that are coming through. How's the temp rolloff activity doing, you know, and your prices and polls. If you can just go through some of that, then I have 1, follow-up.
Speaker #3: stories. Okay.
Seth Weber: Okay. Thank you, guys. Appreciate it.
Speaker #2: Thank you, guys. Appreciate it.
Operator: Thank you. Our next question coming from the line of Shlomo Rosenbaum with Stifel. Your line is now open.
Speaker #1: Thank you. Our next question coming from the lineups. Normal Rosenbaum with Steve Full. Field line is now
Shlomo Rosenbaum: Hi. Thank you very much for taking my questions. I want to jump back to what you started kind of the questioning with on the call, just in terms of the healthy economy. And you said that things are looking, you say, not cautiously optimistic, just optimistic.
Speaker #8: Hi. Thank you very much for taking my questions. I want to jump back to what you started kind of the questioning with on the call just in terms of the health economy.
Yeah. So, so as we, as we look at at what might be considered, leading indicators, because we, we are kind of at the back end of the cycle, so, um, uh, the business cycle, but we do have some business that that tends to be leading indicators. I, I would argue that, that the special waste, uh,
Speaker #8: And you said that it's things are looking, you say, not cautiously optimistic, just optimistic. Can you give us just delve in a little bit more into some of the metrics on that?
Edward Egl: Can you just delve a little bit more into some of the metrics on that? The service interval trends, what are you seeing in scale reports on some of the mature routes? And then on residential, also scale reports on the trucks that are coming through, how's the temp roll-off activity doing in prices and volumes? If you can just go through some of that, then I have one follow-up. Yeah. So as we look at what might be considered leading indicators, because we are kind of at the back end of the cycle of the business cycle. But we do have some business that tends to be leading indicators. I would argue that the special waste stream is kind of a leading indicator for us because while those jobs have to be done, companies have some discretion as to when they have to be done.
Can you just delve a little bit more into some of the metrics on that? The service interval trends, what are you seeing in scale reports on some of the mature routes? And then on residential, also scale reports on the trucks that are coming through, how's the temp roll-off activity doing in prices and volumes? If you can just go through some of that, then I have one follow-up.
Speaker #8: Is the service interval trends? What are you seeing on scale report on some of the mature routes? And then on residential, also scale reports on the trucks that are coming through, how's the temp roll-off activity doing in prices and pulls?
Um, waste stream is is kind of a leading indicator for us, because while those jobs have to be done companies, have some discretion, as to when they have to be done and the pipeline, uh, as we talked to our sales team.
Speaker #8: If you can just go through some of that, then I have one
Speaker #8: follow-up. Yeah.
Jim Fish: Yeah. So as we look at what might be considered leading indicators, because we are kind of at the back end of the cycle of the business cycle. But we do have some business that tends to be leading indicators. I would argue that the special waste stream is kind of a leading indicator for us because while those jobs have to be done, companies have some discretion as to when they have to be done.
Speaker #3: So, as we look at what might be considered leading indicators—because we are kind of at the back end of the cycle, so the business cycle.
Is good on the special waste waste streams. So that that's a bit of a leading indicator for us. That's and and what we're hearing from them is that they're that those jobs and we and we heard it from our area folks last week that those jobs are starting to to manifest themselves. So that is is 1 of the, the indicators that we that we do look at, um, you know, the role offline of business as well. Although a portion of roll off the, you know, the permanent rolloff is, um,
Speaker #3: But we do have some business that tends to be leading indicators. I would argue that the special waste stream is kind of a leading indicator for us because while those jobs have to be done, companies have some discretion as to when they have to be done.
Speaker #3: And the pipeline as we talk to our sales team is good on the special waste stream. So that's a bit of a leading indicator for us that and what we're hearing from them is that those jobs and we heard it from our area folks last week that those jobs are starting to manifest themselves.
Edward Egl: And the pipeline, as we talk to our sales team, is good on the special waste stream. So that's a bit of a leading indicator for us. And what we're hearing from them is that those jobs, and we heard it from our area folks last week, that those jobs are starting to manifest themselves. So that is one of the indicators that we do look at. The roll-off line of business as well, although a portion of roll-off, the permanent roll-off is kind of more analogous to our commercial business. So I'm not sure that's so much a leading as a lagging indicator. But you mentioned temp roll-off, and temp roll-off has been pretty good for us. The C&D business, if I look at C&D, and that's been one that has really bounced around over the years. And C&D for the year was 3.4%.
And the pipeline, as we talk to our sales team, is good on the special waste stream. So that's a bit of a leading indicator for us. And what we're hearing from them is that those jobs, and we heard it from our area folks last week, that those jobs are starting to manifest themselves. So that is one of the indicators that we do look at. The roll-off line of business as well, although a portion of roll-off, the permanent roll-off is kind of more analogous to our commercial business. So I'm not sure that's so much a leading as a lagging indicator. But you mentioned temp roll-off, and temp roll-off has been pretty good for us. The C&D business, if I look at C&D, and that's been one that has really bounced around over the years. And C&D for the year was 3.4%.
Is kind of a more analogous to our commercial business. So I'm not sure that's so much a leading as a lagging indicator, but but you mentioned temporal off and temporal off has been, um, has been pretty good for us, the C and D business. If I look at c and d and that's been 1, that has been, you know, has has really bounced around, um, over the years and, and c and d.
Speaker #3: So that is one of the indicators that we do look at. The roll-off line of business as well, although a portion of roll-off, the permanent roll-off, is kind of more analogous to our commercial business.
For the year. Uh, you know, was 3. I looked, uh, 3.4% and if I looked at, um, you know, last year for the year last year, it was, it was a, uh, a negative number last year. It was, you know, bounced around in 23 and 22 as well for, for some reasons related to the pandemic. But, um, but I I think CND is somewhat of a leading indicator as well if you think about the about home buildings, so, I
Speaker #3: So, I'm not sure that's so much a leading as a lagging indicator. But you mentioned temp roll-off, and temp roll-off has been pretty good for us.
Speaker #3: The C&D business—if I look at C&D, that's been one that has really bounced around over the years. And C&D, for the year, was 3.4%.
Could be strengthening, I don't know. I, I guess what I would tell you is the business performs. Well, whether the whether, uh, you know, in good times or in bad and, um, and I'm feeling I guess a bit more optimistic than maybe I have in in the past.
Speaker #3: And if I looked at last year, for the year last year, it was a negative number last year. It was bounced around in '23 and '22 as well for some reasons related to the pandemic.
Edward Egl: If I looked at last year for the year last year, it was a negative number last year. It was bounced around in 2023 and 2022 as well for some reasons related to the pandemic. I think C&D is somewhat of a leading indicator as well if you think about home building. It's a tough one because I'm trying to read some of the tea leaves that are kind of macro. As I look at GDP, it looks like it could be strengthening. I don't know. I guess what I would tell you is the business performs well, whether in good times or in bad. I'm feeling, I guess, a bit more optimistic than maybe I have in the past. Okay. Great.
If I looked at last year for the year last year, it was a negative number last year. It was bounced around in 2023 and 2022 as well for some reasons related to the pandemic. I think C&D is somewhat of a leading indicator as well if you think about home building. It's a tough one because I'm trying to read some of the tea leaves that are kind of macro. As I look at GDP, it looks like it could be strengthening. I don't know. I guess what I would tell you is the business performs well, whether in good times or in bad. I'm feeling, I guess, a bit more optimistic than maybe I have in the past.
Speaker #3: But I think C&D is somewhat of a leading indicator as well if you think about home building. So it's a tough one because I'm trying to read some of the tea leaves that are kind of macro, and as I look at GDP, it looks like it could be strengthening.
Okay, great. And then just I want to follow up a little bit more, just on a question. That was uh, excuse me, comment that was made last quarter in terms of uh, suspending kind of the pricing initiatives in the healthcare Solutions area that would be expected to be done by the end of the first quarter of this year, are you still on track for that? I mean obviously from from your commentary it looks like pricing is going to pick up this year based on your discussion of 4.2%. But is it a matter of like really hitting that end of the first quarter? We're done with those issues that we're having that were was preventing the pricing? Or is that going to extend a little bit further or or have you already started it?
Speaker #3: I don't know. I guess what I would tell you is the
Speaker #1: business The performs well . Whether the weather , you know , in good times or in bad and . And I'm feeling , I more and and I'm guess , a bit feeling , I guess a bit more optimistic than maybe I have in the past .
Yeah, so here's what I would say about, you know, about last quarter's comment. I mean, you know, that, that was not a, a universal comment. I mean some customers. Yes, we had, uh, some some customers we had suspended price increases, but
Shlomo Rosenbaum: Okay. Great.
Edward Egl: And then, just, I want to follow up a little bit more just on a question that was, excuse me, a comment that was made last quarter in terms of suspending kind of the pricing initiatives in the healthcare solutions area that would be expected to be done by the end of the first quarter of this year. Are you still on track for that? I mean, obviously, from your commentary, it looks like pricing is going to pick up this year based on your discussion of 4.2%. But is it a matter of really hitting that end of the first quarter where we're done with those issues that we're having that was preventing the pricing, or is that going to extend a little bit further, or have you already started it? Yeah. So here's what I would say about last quarter's comment. I mean, that was not a universal comment.
And then, just, I want to follow up a little bit more just on a question that was, excuse me, a comment that was made last quarter in terms of suspending kind of the pricing initiatives in the healthcare solutions area that would be expected to be done by the end of the first quarter of this year. Are you still on track for that? I mean, obviously, from your commentary, it looks like pricing is going to pick up this year based on your discussion of 4.2%. But is it a matter of really hitting that end of the first quarter where we're done with those issues that we're having that was preventing the pricing, or is that going to extend a little bit further, or have you already started it?
Speaker #2: Okay , great . And then just I want to follow up a little bit more just on a question that was , excuse me comment that was made last quarter in terms of suspending kind of the pricing initiatives in the healthcare solutions area , that would be expected to be done by the end of the first quarter of this year .
Speaker #2: Are you still on track for that ? I mean , obviously from from your commentary , it looks like pricing is going to pick up this year based on your discussion of 4.2% , but is it a matter of like really hitting that end of the first quarter or we're done with those issues that we're having that was preventing the pricing , or is that going to extend a little bit further , or have you already started it ?
The large majority of our customers were getting price increases but as I said earlier it was it was really being diluted by these credit memos and and so we believe that those credit memos which are really just a a tool to try and clean up some of these past due receivables. Those credit, memos, We Believe peaked this quarter or last quarter. I should say Q4 and those stocks.
Jim Fish: Yeah. So here's what I would say about last quarter's comment. I mean, that was not a universal comment.
Speaker #1: Yeah . So here's what I would say about about last quarter's comment . I mean , you know , a not universal comment .
Edward Egl: I mean, some customers, yes, we had some customers we had suspended price increases. But the large majority of our customers were getting price increases. But as I said earlier, it was really being diluted by these credit memos. And so we believe that those credit memos, which are really just a tool to try and clean up some of these past-due receivables, those credit memos we believe peaked this quarter or last quarter, I should say, Q4. And those start on a nice downward trend, which ends up being a tailwind for us as we think about the whole year of 2026 versus 2025. So pricing, look, we have, I think, a fantastic price team, and they are definitely looking at the opportunities that are in front of us.
I mean, some customers, yes, we had some customers we had suspended price increases. But the large majority of our customers were getting price increases. But as I said earlier, it was really being diluted by these credit memos. And so we believe that those credit memos, which are really just a tool to try and clean up some of these past-due receivables, those credit memos we believe peaked this quarter or last quarter, I should say, Q4. And those start on a nice downward trend, which ends up being a tailwind for us as we think about the whole year of 2026 versus 2025. So pricing, look, we have, I think, a fantastic price team, and they are definitely looking at the opportunities that are in front of us.
Speaker #1: I mean , some customers , yes , we had some some customers . We suspended price increases , but had the large majority of our customers were getting price increases .
Hard on a, a nice, uh, downward Trend, which ends up being a, a Tailwind for us as we think about the whole year of 2026 versus 2025. So pricing, uh, look, our we have, I think, uh, a fantastic price team and they are are definitely looking at the opportunities that are in front of us. But a lot of those opportunities are not so much a, a price execution as it is just um, you know, less dilution to the overall gross number.
Okay, thank you.
Speaker #1: But as I said earlier , it was it was really being diluted by these credit memos . And and so we believe that those credit memos , which are really just a tool to try and clean up some of these past due receivables , those credit memos , we believe , peaked this quarter or last quarter , I should say Q4 those start .
Speaker #1: But as I said earlier , it was it was really being diluted by these credit memos . And and so we believe that those credit memos , which are really just a tool to try and clean up some of these past due receivables , those credit memos , we believe , peaked this quarter or last quarter , I should say Q4 those start on And a nice downward trend , which ends up being a tailwind for us as we think about the whole year of 2026 versus 2025 .
Thank you. Our next question comes from the line of thereby summer went through a sea of Melbourne.
Speaker #1: Pricing look, we have, I think, a fantastic price team and they are definitely looking at the opportunities that are in front of us.
Edward Egl: But a lot of those opportunities are not so much a price execution as it is just less dilution to the overall gross number. Okay. Thank you. Thank you. Our next question comes from the line of Tobey Sommer with Truist. Your line is now open. Thank you. From a capital deployment perspective, are you shifting broadly to share repurchase? Or as you look into 2027, 2028, sort of a longer period of time, you're supposed to produce about $12 billion in free cash over that three-year period. How do you see it shaken out between acquisitions in the core, acquisitions and investments outside the core, and repurchase? Sure. Sure. Yeah. I mean, as we alluded to in last quarter and also with our December announcement on some of our shareholder returns, we do view 2026 as a year of harvest and a balanced capital allocation program.
But a lot of those opportunities are not so much a price execution as it is just less dilution to the overall gross number.
Speaker #1: But a lot of those opportunities are not so much execution as they are just, you know, less dilution to the overall gross number.
Shlomo Rosenbaum: Okay. Thank you.
Operator: Thank you. Our next question comes from the line of Tobey Sommer with Truist. Your line is now open.
Speaker #2: Thank Okay . you .
Speaker #3: Thank you . Our next question comes from the line of Toby Summer with Truist . Is now open .
Thank you from a capital deployment perspective. Uh are are you shifting broadly to share repurchase or you know, if you look into the 2728 sort of a longer period of time, you're supposed to take in about produce about 12 billion in free cash over that 3 year period. How do you see it shaking out between Acquisitions and the core Acquisitions and Investments outside the core and repurchase? Sure sure. Yeah. I mean as we alluded to um in the last quarter and also with with our uh December announcement on on some of our shareholder returns. We we do view 2026 as a a year of harvest in a balanced Capital allocation program. But to your point the the the beauty of our business is that it does generate a lot of excess cash flow and you could expect a pretty balanced approach going forward. We do, we do want to continue to return, uh, Capital to share
Tobey Sommer: Thank you. From a capital deployment perspective, are you shifting broadly to share repurchase? Or as you look into 2027, 2028, sort of a longer period of time, you're supposed to produce about $12 billion in free cash over that three-year period. How do you see it shaken out between acquisitions in the core, acquisitions and investments outside the core, and repurchase?
Speaker #4: Thank you . From a capital deployment perspective , are you shifting broadly to share repurchase or , you know , as you look into 27 , 28 , sort of a longer period of time ?
Holder. So you should expect that our share repurchase program is not, uh, 1 1, Time Event in 2026. Will continue it going forward, but it's going to be, um, it's going to be governed by kind of what opportunities we have in terms of investment opportunities, both organically and also inorganically. But
Speaker #4: You're supposed to take in about, produce about $12 billion in free cash over the period—that three-year period. How do you see it shaking out between acquisitions and the core, acquisitions and investments outside the core, and repurchase?
The key word here, I think is balanced from a shareholder perspective and and that's what you should expect.
David Reed: Sure. Sure. Yeah. I mean, as we alluded to in last quarter and also with our December announcement on some of our shareholder returns, we do view 2026 as a year of harvest and a balanced capital allocation program.
Speaker #5: Sure , sure . Yeah . I mean , as we alluded to in last quarter and also with with our December announcement on on some of our shareholder returns , we we do view 2026 as a year of harvest and capital a balanced allocation program .
Edward Egl: But to your point, the beauty of our business is that it does generate a lot of excess cash flow. And you could expect a pretty balanced approach going forward. We do want to continue to return capital to shareholders. So you should expect that our share repurchase program is not a one-time event. In 2026, we'll continue it going forward, but it's going to be governed by kind of what opportunities we have in terms of investment opportunities, both organically and also inorganically. But the keyword here, I think, is balance from a shareholder perspective, and that's what you should expect. I'm curious what you're hearing from healthcare customers about their sort of tolerance for price increase, particularly this year, given various declines in federal funding ranging from the exchange subsidies to Medicaid cuts that may come in a year that could pressure hospital margins.
But to your point, the beauty of our business is that it does generate a lot of excess cash flow. And you could expect a pretty balanced approach going forward. We do want to continue to return capital to shareholders. So you should expect that our share repurchase program is not a one-time event. In 2026, we'll continue it going forward, but it's going to be governed by kind of what opportunities we have in terms of investment opportunities, both organically and also inorganically. But the keyword here, I think, is balance from a shareholder perspective, and that's what you should expect.
I'm curious what you're hearing from Healthcare customers about their uh, sort of tolerance for pricing increase. Uh, particularly this year. Given various declines in federal funding, ranging from The Exchange subsidies to Medicaid cuts. That, you know, may come in a year that could pressure Hospital margins.
Speaker #5: But to your point , the beauty of our business is that it does generate a lot of excess cash flow , and you could expect a pretty balanced approach going forward .
I I guess I would just say I haven't heard anybody, say there's an intolerance
For price increases, so if that's a good sign then.
Speaker #5: We do want to continue to return capital to our shareholders. We expect that our share repurchase program is not timed to any specific event in 2026.
Speaker #5: We'll continue it going forward , but it's going to be it's going to be governed by kind of what opportunities we have in terms of investment opportunities , both organically and also inorganically .
Speaker #5: But the key word here, I think, is balanced from a shareholder perspective. And that's what you should expect.
Tobey Sommer: I'm curious what you're hearing from healthcare customers about their sort of tolerance for price increase, particularly this year, given various declines in federal funding ranging from the exchange subsidies to Medicaid cuts that may come in a year that could pressure hospital margins.
Speaker #4: I'm curious what you're hearing from healthcare customers about their sort of tolerance for price increase , particularly this year , given various declines in federal funding ranging from the exchange subsidies to Medicaid cuts that , you know , may come in a year that could pressure hospital margins .
That's what I've heard, I think what the handful of customers. I've, I've visited with, I would tell you that, I think what's encouraging is the fact that when you combine what word WM kind of core services with the ability to integrate those with the with the additional Health Care Services. I think the value proposition is something that's really resonating with the customers. Especially the ones that you was referring to earlier. You know, these big hospital networks. We sit here in Houston, obviously 1 of The Centers of the universe if you will on that front. Um and when you walk in the door with a comprehensive set of capabilities that these combined organizations have now I think there's a value proposition that uh is not going to be is not going to be matched out there. Yeah, I think these
and bees that we've talked about and even C's, this is going to end up looking like
Edward Egl: I guess I would just say I haven't heard anybody say there's an intolerance for price increases. So if that's a good sign, then that's what I've heard. I think with the handful of customers I've visited with, I would tell you that I think what's encouraging is the fact that when you combine what WM kind of core services with the ability to integrate those with the additional healthcare services, I think the value proposition is something that's really resonating with the customers, especially the ones that Jim was referring to earlier. These big hospital networks, we sit here in Houston, obviously, one of the centers of the universe, if you will, on that front. And when you walk in the door with a comprehensive set of capabilities that these combined organizations have now, I think there's a value proposition that is not going to be matched out there.
John Morris: I guess I would just say I haven't heard anybody say there's an intolerance for price increases. So if that's a good sign, then that's what I've heard.
Speaker #1: I would just I guess say I haven't heard anybody say there's an intolerance for price increases . So if that's a good sign , then then that's what I've heard .
David Reed: I think with the handful of customers I've visited with, I would tell you that I think what's encouraging is the fact that when you combine what WM kind of core services with the ability to integrate those with the additional healthcare services, I think the value proposition is something that's really resonating with the customers, especially the ones that Jim was referring to earlier. These big hospital networks, we sit here in Houston, obviously, one of the centers of the universe, if you will, on that front. And when you walk in the door with a comprehensive set of capabilities that these combined organizations have now, I think there's a value proposition that is not going to be matched out there.
Speaker #6: I think what the a handful of customers I've with , I visited would tell you that I think what's encouraging is the fact that when you combine were what W.M kind of core services with ability to the integrate those with with the additional healthcare services .
Forward. I don't think it'll look much different than than what we see with with other big national accounts.
Speaker #6: I think the value proposition is something that's really resonating with the customers , especially the Jim was ones that referring to earlier . You know , these big hospital networks we sit here in Houston , obviously , one of the centers of the universe , if you will , on that front .
Appreciate that. What are you seeing in the um hazardous waste? Uh, business is that industrial optimism that you kind of mentioned already palpable?
Speaker #6: And when you walk in the door with a comprehensive set of capabilities that these combined organizations have now, I think there's a value proposition that is not going to be— is not going to be matched out there.
Edward Egl: Yeah. I think these A's and B's that we've talked about, A's and even C's, this is going to end up looking like they're similar in so many respects to our big national accounts on the legacy side. So it's going to be a it's a negotiation. They have a contract. It's going to be a negotiation on price. What's the price increase going to be? And a lot of that ends up on how much they appreciate the differentiated service offering. So I think that's going forward, I don't think it'll look much different than what we see with other big national accounts. Appreciate that. What are you seeing in the hazardous waste business? Is that industrial optimism that you kind of mentioned already palpable? I think probably our special waste line that we've all commented on is probably a good spot to look.
Jim Fish: Yeah. I think these A's and B's that we've talked about, A's and even C's, this is going to end up looking like they're similar in so many respects to our big national accounts on the legacy side. So it's going to be a it's a negotiation. They have a contract. It's going to be a negotiation on price. What's the price increase going to be? And a lot of that ends up on how much they appreciate the differentiated service offering. So I think that's going forward, I don't think it'll look much different than what we see with other big national accounts.
Speaker #1: Yeah , I think these A's and B's that we've talked about and even sees this is going to end up looking like that .
Speaker #1: They're similar in so many respects to our big national accounts . On the legacy side . So it's going to be a it's a negotiation that they have a contract .
I think probably our special Wasteland that we've all commented on is probably a good spot to look and and we've said our pipeline is strong, our results would would demonstrate that through 2025 and I think going into 2026. We haven't seen any indications that that's going to solve and that's probably the 1 bar barometer that I would point to that's probably most closely aligned with with with your question.
Thank you.
Speaker #1: It's going to be a negotiation on price. What's the price increase going to be? And a lot of that ends up on how much they appreciate the differentiated service offerings.
Thank you. Our next question, coming from the line of William Griffin. With sparkly Salon is Melvin
Speaker #1: So so I think that's , you know , going forward I don't think it'll look much different than , than what we see with , with other big national accounts .
Tobey Sommer: Appreciate that. What are you seeing in the hazardous waste business? Is that industrial optimism that you kind of mentioned already palpable?
Speaker #4: Appreciate that. What are you seeing in the hazardous waste business? Is that industrial optimism that you kind of mentioned already palpable?
Great. Thanks very much. Um, I just wanted to come back to some of the incremental disclosure you, you gave on the sustainability business. So you gave us the parts to kind of get to sort of your 700 million. Implied, sustainability growth even but uh, uh, in 27,
John Morris: I think probably our special waste line that we've all commented on is probably a good spot to look.
Speaker #6: I think probably our special waistline that we've all commented on is probably a good spot to look. And we've said our pipeline is strong, our results would demonstrate that through 2025.
Edward Egl: We've said our pipeline is strong. Our results would demonstrate that through 2025. I think going into 2026, we haven't seen any indications that that's going to slow. That's probably the one barometer that I would point to that's probably most closely aligned with your question. Thank you. Thank you. Our next question coming from the line of William Griffin with Barclays. Your line is now open. Great. Thanks very much. I just wanted to come back to some of the incremental disclosure you gave on the sustainability business. So you gave us the parts to kind of get to sort of your $700 million implied sustainability growth EBITDA in 2027, obviously a little below the target you gave at prior analyst days.
We've said our pipeline is strong. Our results would demonstrate that through 2025. I think going into 2026, we haven't seen any indications that that's going to slow. That's probably the one barometer that I would point to that's probably most closely aligned with your question.
Speaker #6: And I think going into 2026, we haven't seen any indications that that's going to solve. And that's probably the one barometer that I would point to.
Speaker #6: That's probably most closely aligned with , with with your question .
Tobey Sommer: Thank you.
Um, obviously a little below, the, the target you you gave, um, uh, at prior analyst days. But, you know, if I adjust for this sort of lower recycled commodity price environment based on your sensitivity, it implies that was maybe 150 million e, but a headwind. Um, and so, you know, sort of X Out uh the commodity headwind it it it feels like maybe this business is actually performing. Uh you know, well ahead of
Operator: Thank you. Our next question coming from the line of William Griffin with Barclays. Your line is now open.
Your initial expectations. Is that a fair characterization?
Speaker #4: Thank you
Speaker #4: .
Speaker #3: you . Thank Our next question coming from the line of William Griffin with Barclays , now open Ellen is .
William Griffin: Great. Thanks very much. I just wanted to come back to some of the incremental disclosure you gave on the sustainability business. So you gave us the parts to kind of get to sort of your $700 million implied sustainability growth EBITDA in 2027, obviously a little below the target you gave at prior analyst days.
Speaker #7: Great . Thanks very much . I just wanted to come back to some of incremental the disclosure you gave on the sustainability business .
Speaker #7: So you gave us the parts to kind of get to sort of your 700 million implied sustainability growth , EBITDA in 27 , little obviously a below the target you gave prior analyst days , but , you know , if I adjust for this sort of lower recycled commodity price environment based on your sensitivity , it implies that was maybe 150 million EBITDA headwind .
Edward Egl: But if I adjust for this sort of lower recycled commodity price environment based on your sensitivity, it implies that was maybe $150 million EBITDA headwind. So sort of X out the commodity headwind, it feels like maybe this business is actually performing well ahead of your initial expectations. Is that a fair characterization? We're really pleased with how the recycling business is performing. Absolutely. I think the number that you rattled off was really more for the aggregate of our recycling business versus the $700 million number relates to the growth projects of recycling and renewable energy. But the comment still stands.
But if I adjust for this sort of lower recycled commodity price environment based on your sensitivity, it implies that was maybe $150 million EBITDA headwind. So sort of X out the commodity headwind, it feels like maybe this business is actually performing well ahead of your initial expectations. Is that a fair characterization?
We're really pleased with how the recycling business is performing. Absolutely, I think the number that you rattled off was really more for the, the aggregate of our recycling business versus the 700 million number relates to the growth projects of recycling and renewable energy. But the comments still stands, we've been very pleased with the Investments that we've made in Automation and everything that we expected and then some is being delivered coming out of those automation Investments whether it's
Speaker #7: And so , you know , sort of X out the commodity headwind , it feels like maybe this business is actually performing , you know , well ahead of your initial expectations .
Higher throughput at the facilities whether it's higher price points on the commodity Commodities that we sell whether it's labor, which was huge for us and has been over a 30% Improvement. So really pleased with those Investments.
Tara Hemmer: We're really pleased with how the recycling business is performing. Absolutely. I think the number that you rattled off was really more for the aggregate of our recycling business versus the $700 million number relates to the growth projects of recycling and renewable energy. But the comment still stands.
Speaker #7: Is that a fair characterization ?
Speaker #8: We're really pleased with how the recycling business is performing. Absolutely. I think the number that you rattled off was really more for the aggregate of our recycling business, versus the $700 million number, which relates to the growth projects of recycling and renewable energy.
I appreciate that and just um, the follow-up here, you know, you you gave the sustainability growth to keep it a breakout um, or or uh contribution, uh, for the 2026 guide, I think, 235 to 2505 million.
Have you broken that out between Recycling and RNG?
Edward Egl: We've been very pleased with the investments that we've made in automation and everything that we expected, and then some is being delivered coming out of those automation investments, whether it's higher throughput at those facilities, whether it's higher price points on the commodities that we sell, whether it's labor, which was huge for us and has been over a 30% improvement. So really pleased with those investments. Appreciate that. And just the follow-up here, you gave the sustainability growth EBITDA breakout or contribution for the 2026 guide, I think $235 to 255 million. Have you broken that out between recycling and R&G? We have not. But the way to think about it, including the royalty, it's about 60% renewable energy, 40% recycling. Perfect. Thanks very much. Thank you. Our next question will come from the line of Tammy Zakaria with JP Morgan. Your line is now open. Hey, good morning.
We've been very pleased with the investments that we've made in automation and everything that we expected, and then some is being delivered coming out of those automation investments, whether it's higher throughput at those facilities, whether it's higher price points on the commodities that we sell, whether it's labor, which was huge for us and has been over a 30% improvement. So really pleased with those investments.
Speaker #8: But the comment still stands . We've been very pleased with the investments that we've made in automation and everything that we expected . And then some delivered is being coming out of those investments , automation whether it's higher throughput at those facilities , whether it's higher price points on the commodity commodities that we sell , whether it's labor , which was huge for us and has been over 30% improvement .
Uh we we have not uh but the way to think about it including the royalty, it's about 60% renewable energy, 40% recycling.
Perfect. Thanks very much.
Thank you.
Our next question will come from the lineup.
Tammy, is that carry up with JP Morgan?
William Griffin: Appreciate that. And just the follow-up here, you gave the sustainability growth EBITDA breakout or contribution for the 2026 guide, I think $235 to 255 million. Have you broken that out between recycling and R&G?
Speaker #8: So really pleased with those investments .
Hey, good morning, thank you so much for the sustainability, even the growth of 235 to 2:55. Can you help us with the Cadence of this as we think about 1 Q versus the rest of the year?
Speaker #7: Appreciate that . And just the follow up here . You know , you gave the sustainability growth EBITDA breakout or contribution for the 2026 guide ?
Speaker #7: I think two hundred thirty-five to two hundred fifty-five million. Have you broken that out between recycling and RNG?
Tara Hemmer: We have not. But the way to think about it, including the royalty, it's about 60% renewable energy, 40% recycling.
Speaker #8: We we have not . way to But the think about it , including the royalty . It's about 60% renewable energy , 40% recycling .
You're gonna similar story the way to think about it. First half, second half. So you're going to have um, more of a ramp in the second half than the first half when you have the carryover effect of what we brought online, the back half of 2025 and then we're bringing new projects online 3 in the first half of
William Griffin: Perfect. Thanks very much.
Operator: Thank you. Our next question will come from the line of Tammy Zakaria with JP Morgan. Your line is now open.
2026, so you'll see a bigger half bigger impact in the second half than the first half.
Speaker #7: Perfect . Thanks very much .
Speaker #3: Thank you . Our next question will come from the line of Tammy Zaccaria with J.P. is now open Ellen .
Tami Zakaria: Hey, good morning.
So for modeling purposes is, um, 40 60, first time versus backup is is a good proxy.
Edward Egl: Thank you so much. So the sustainability EBITDA growth of 235 to 255, can you help us with the cadence of this as we think about Q1 versus the rest of the year? Similar story, the way to think about it, first half, second half. So you're going to have more of a ramp in the second half than the first half when you have the carryover effect of what we brought online the back half of 2025, and then we're bringing new projects online in the first half of 2026. So you'll see a bigger impact in the second half than the first half. So for modeling purposes, is 40/60 first half versus back half a good proxy? I think Ed can get back to you on that, on some of the modeling questions. Understood. Thank you. That's all I had for today. Thank you.
Thank you so much. So the sustainability EBITDA growth of 235 to 255, can you help us with the cadence of this as we think about Q1 versus the rest of the year?
Speaker #9: Good Hey . morning . Thank you so much . So the sustainability EBITDA growth of Can 235 to 255 . you help us with the cadence of this as we think about one Q versus the rest of the year ?
I think Ed Ed can get back to you on that on some of the modeling questions.
Understood. Thank you. That's all I had for today.
Tara Hemmer: Similar story, the way to think about it, first half, second half. So you're going to have more of a ramp in the second half than the first half when you have the carryover effect of what we brought online the back half of 2025, and then we're bringing new projects online in the first half of 2026. So you'll see a bigger impact in the second half than the first half.
Thank you. Our next question, will come from the line of Kevin Chen with CIBC your line is now open.
Speaker #8: You're going to see a similar story. The way to think about it: first half, second half. So you're going to have more of a ramp in the second half versus the first half.
Speaker #8: When you than the have the carryover effect of what we brought online , the back half of 2025 . And then we're bringing projects new online .
I think since Alexander on for, uh, Kevin here. So I I believe the EPA is set to finalize the renewal fuel blending rules in q1. I was wondering if you could share any thoughts or insights into potential changes, they could make to the volume obligations from their original proposal. Thanks.
Speaker #8: Three in the first half of 2026 . So you'll see a bigger , bigger impact in the second half than the first half .
yeah, we had a we're hoping that the issue would
Tami Zakaria: So for modeling purposes, is 40/60 first half versus back half a good proxy?
Speaker #9: So for modeling purposes, is 40/60 first half versus back half a good proxy?
Tara Hemmer: I think Ed can get back to you on that, on some of the modeling questions.
Speaker #8: I think Ed can get back to you on that, on some of the modeling questions.
Tami Zakaria: Understood. Thank you. That's all I had for today.
Edward Egl: Our next question will come from the line of Kevin Chiang with CIBC. Your line is now open. Hi, thanks. This is Alexander on for Kevin here. So I believe the EPA is set to finalize the renewable fuel blending rules in Q1. I was wondering if you could share any thoughts or insights into potential changes they could make to the volume obligations from their original proposal. Thanks. Sure. Yeah. We're hoping that they issue it in Q1. We were hoping it would come out in late Q4, but the government shutdown delayed that a bit. What we've seen is pretty much the market has priced in the current RVO. And if anything, we're cautiously optimistic. Maybe there might be some changes around the edges that could be constructive for pricing. We're not anticipating anything dramatic coming out of the RVO. I think that's the most important point.
Our next question will come from the line of Kevin Chiang with CIBC. Your line is now open.
Speaker #3: Thank you. Our next question will come from the line of Kevin Chen with CIBC. Your line is now open.
Hi, thanks. This is Alexander on for Kevin here. So I believe the EPA is set to finalize the renewable fuel blending rules in Q1. I was wondering if you could share any thoughts or insights into potential changes they could make to the volume obligations from their original proposal. Thanks.
Speaker #10: Hi . Thanks , Alexander , on for Kevin here . So I believe the EPA is set to finalize the renewable fuel blending rules for in I was Q1 .
For pricing, but we're not anticipating anything dramatic coming out of the rvo. I think that's the most important point and we've really seen stability in rennes pricing, which is the most important thing for our business. And our, our team has done a great job in navigating, um, selling our RNs rapidly over time.
Speaker #10: Wondering if you could share any insights, thoughts, or input into potential changes they could make to the volume from their obligations' original proposal?
Okay perfect. Thanks. So I can turn it back.
Thank you.
Tara Hemmer: Sure. Yeah. We're hoping that they issue it in Q1. We were hoping it would come out in late Q4, but the government shutdown delayed that a bit. What we've seen is pretty much the market has priced in the current RVO. And if anything, we're cautiously optimistic. Maybe there might be some changes around the edges that could be constructive for pricing. We're not anticipating anything dramatic coming out of the RVO. I think that's the most important point.
Speaker #8: . Thanks Sure . We had a we're Yeah . that they issued hoping in Q1 . We were we were hoping it would come out in late Q4 .
Our last questioner in queue coming from the lineup, Stephanie Moore with Jeffrey C Line is now open.
Speaker #8: But the government shutdown delayed that a bit. What we've seen is pretty much the market has priced in the current RVO.
Speaker #8: And if anything , we're cautiously Maybe there optimistic . might be some some changes around the edges that could be constructive for pricing , but we're not anticipating anything dramatic coming out of Rvo .
Edward Egl: And we've really seen stability in RIN pricing, which is the most important thing for our business. And our team has done a great job in navigating selling our RINs rationally over time. Okay. Perfect. Thanks. I can turn it back. Thank you. Our last questioner in Q&A coming from the line of Stephanie Moore with Jefferies. Your line is now open. Hi. Good morning. Thank you. I wanted to follow up on a prior question that was just asked on capital allocation priorities. I mean, I appreciate the commentary regarding keeping a balanced approach, but I also think as we think about 2027 and 2028, just the sheer cash flow that's going to be kind of spun off from this business, especially with the RNG investments coming through, you should be back to your targeted leverage this year.
And we've really seen stability in RIN pricing, which is the most important thing for our business. And our team has done a great job in navigating selling our RINs rationally over time.
Speaker #8: think that's the I most important point . really we've And seen stability in Rin pricing , which is the most important for our thing business and our team has done a great job in navigating selling our Rins radically over time .
[Analyst]: Okay. Perfect. Thanks. I can turn it back.
Hi, good morning, thank you. I wondered to follow up on a prior question. That was just asked on Capital, allocation priorities. I mean, I appreciate the, the commentary regarding, you know, keeping a balanced approach. But I also think as we think about 2027 and 2028, just the the sheer cash flow that's going to be kind of spun off from this business, especially with the RNG Investments coming through. You should be back to your targeted, leverage this year. So as you think about that balance and maybe looking specifically at the m&a component, you're going to have again, a lot of optionality. So if you think about that, optionality, you know, any areas that are particularly interesting, if you think about the next couple of years, thanks,
Operator: Thank you. Our last questioner in Q&A coming from the line of Stephanie Moore with Jefferies. Your line is now open.
Speaker #10: Okay , perfect . Thanks . I can turn it back .
Speaker #3: Thank you . Our last question on queue coming from the line of Stephanie Moore with Jefferies , Ellen is now open .
Stephanie Moore: Hi. Good morning. Thank you. I wanted to follow up on a prior question that was just asked on capital allocation priorities. I mean, I appreciate the commentary regarding keeping a balanced approach, but I also think as we think about 2027 and 2028, just the sheer cash flow that's going to be kind of spun off from this business, especially with the RNG investments coming through, you should be back to your targeted leverage this year.
Speaker #11: morning . Hi . Good Thank you . I wanted to follow up on a prior question that was just asked on capital allocation priorities .
Speaker #11: I mean , I appreciate the commentary regarding keeping a balanced approach , but I also think as we think about 2027 and 2028 , just the sheer cash flow that's going to be kind of spun off from this business , especially the with RNG investments coming through .
I mean, I think as far as m&a goes and then David could come in tomorrow on the capital allocation piece, um, or the the share purchase dividend. But those are kind of uh, dividends kind of set but um, but m&a look, I, I guess what I would say and John can reiterate here there, there's still plenty of good strategic acquisition opportunities out there. I, I wouldn't expect to see us, uh, you know, kind of stray outside of that. Um, we have used, typically 100 to 200 million as as
Speaker #11: You should be back to your targeted leverage this year . So as you think about that balance and maybe looking specifically at the M&A component , you're going to have , again , a lot of optionality .
Edward Egl: So as you think about that balance and maybe looking specifically at the M&A component, you're going to have, again, a lot of optionality. So as you think about that optionality, any areas that are particularly interesting as you think about the next couple of years? Thanks. I mean, I think as far as M&A goes, and then David can comment more on the capital allocation piece or the share purchase dividend, but those are kind of dividends kind of set. But M&A, look, I guess what I would say, and John can reiterate here, there's still plenty of good strategic acquisition opportunities out there. I wouldn't expect to see us kind of stray outside of that. We have used typically $100 to 200 million as our estimate for acquisitions throughout the year, and that's the number we have baked in for this year, that range.
So as you think about that balance and maybe looking specifically at the M&A component, you're going to have, again, a lot of optionality. So as you think about that optionality, any areas that are particularly interesting as you think about the next couple of years? Thanks.
Our, uh, you know, estimate for acquisition Acquisitions, throughout the year. And that's the number we have, uh, baked in for this year that range. So could be at the high end of that range. But um, but I I think for the, for the next few years
Speaker #11: So, as you think about optionality, you know, any areas that are particularly interesting as you think about the next couple of years?
That's the number I would, if I were modeling, that's the number I would use is, is kind of a 100 to 200 million in acquisitions.
Jim Fish: I mean, I think as far as M&A goes, and then David can comment more on the capital allocation piece or the share purchase dividend, but those are kind of dividends kind of set. But M&A, look, I guess what I would say, and John can reiterate here, there's still plenty of good strategic acquisition opportunities out there. I wouldn't expect to see us kind of stray outside of that. We have used typically $100 to 200 million as our estimate for acquisitions throughout the year, and that's the number we have baked in for this year, that range.
Speaker #11: Thanks .
Speaker #1: I mean , I think as far as M&A goes , and then David can comment more on the capital allocation piece . I are the share purchase dividend , but those are kind of dividends kind of set .
Speaker #1: But M&A—look, I guess what I would say, and John can reiterate here, is that there are still plenty of good strategic acquisition opportunities out there.
Speaker #1: I wouldn't expect to see us kind of stray outside of that . We have used typically 100 to 200 million as our , you know , estimates for acquisition acquisitions throughout the year .
Uh and then David, uh, you know, dividends yeah I would say with the increase is going to be but but dividends and care and capital allocation are going to make up the rest because really the balance sheet. I think you would say is in good shape. Yeah. The the balancing is in great great shape. I think the 1 thing just to your point about now that we have the share repurchase program, it's going to start back up this quarter. Um obviously we we look at acquiring our own shares versus uh large. If we're looking at larger opportunities, uh we have a very biased view on on kind of what the value of our company is and so that's I think you're going to see us to continue our share purchase program. Um just from that point alone, but we're very disciplined in terms of our pricing approach to to acquisitions.
Speaker #1: And that's the number we have baked in for this year . That range . So it could be at the high end of that range .
Edward Egl: So it could be at the high end of that range. But I think for the next few years, that's the number I would, if I were modeling, that's the number I would use is kind of $100 to 200 million in acquisitions. And then, David, dividend, hard to say what the increase is going to be, but dividends and capital allocation are going to make up the rest. Because really, the balance sheet, I think you would say, is in good shape. Yeah. The balance sheet's in great shape. I think the one thing, just to your point about now that we have the share repurchase program, it's going to start back up this quarter. Obviously, we look at acquiring our own shares versus if we're looking at larger opportunities, we have a very biased view on kind of what the value of our company is.
So it could be at the high end of that range. But I think for the next few years, that's the number I would, if I were modeling, that's the number I would use is kind of $100 to 200 million in acquisitions. And then, David, dividend, hard to say what the increase is going to be, but dividends and capital allocation are going to make up the rest. Because really, the balance sheet, I think you would say, is in good shape.
Speaker #1: But but I think for the for the next few years , that's the number I would if I were modeling , that's the number I would use is kind of 100 to 200 million in acquisitions .
Thank you. And I'm showing no further questions in the queue. I will now turn the call back over to Mr. Jim fist awmco for any closing remarks.
Speaker #1: And then David , you know , dividend What the increase is going . Hard to say . to be . But dividends and and capital allocation going to make up the rest because really the balance sheet I think you would say is in good shape .
All right. Well, I had a 15-minute closing, remark plan, but in a lot of the time,
David Reed: Yeah. The balance sheet's in great shape. I think the one thing, just to your point about now that we have the share repurchase program, it's going to start back up this quarter. Obviously, we look at acquiring our own shares versus if we're looking at larger opportunities, we have a very biased view on kind of what the value of our company is.
Speaker #5: Yeah . The balance sheet is in great , great shape . I think the one thing , just to your point about now that we have the share repurchase program , it's going to start back up this quarter .
Conference call. Thank you for your participation and you may now disconnect
Speaker #5: Obviously , we look at acquiring our own shares versus if we're looking at larger opportunities , we have a very biased view on kind of what the value of our company is .
Edward Egl: And so I think you're going to see us to continue our share repurchase program just from that point alone. But we're very disciplined in terms of our pricing approach to acquisitions. Thank you. And I'm showing no further questions in the queue. I will now turn the call back over to Mr. Fish, WM CEO, for any closing remarks. All right. Well, I had a 15-minute closing remark planned, but in light of the time, I'll just say thank you all for your great questions today, and we will talk to you next quarter. This concludes today's conference call. Thank you for your participation, and you may now disconnect.
And so I think you're going to see us to continue our share repurchase program just from that point alone. But we're very disciplined in terms of our pricing approach to acquisitions.
Speaker #5: And so that's I think you're going to see us to continue our share repurchase program . Just from that point alone . But we're very disciplined in terms of our pricing approach to to acquisitions .
Operator: Thank you. And I'm showing no further questions in the queue. I will now turn the call back over to Mr. Fish, WM CEO, for any closing remarks.
Speaker #3: Thank you. And I'm showing no further questions in the queue. I will now turn the call back over to Mr. Jim Fish, WMC, for any closing remarks.
Jim Fish: All right. Well, I had a 15-minute closing remark planned, but in light of the time, I'll just say thank you all for your great questions today, and we will talk to you next quarter.
Speaker #1: Well , I had a
Speaker #1: 15 minute closing . remark All right . plan , but in light of the time , I'll just say thank you all for your for your great questions today and we will talk to you next quarter .
Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect.
