Note: This is an earnings call transcript. Content may contain errors.

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DATE

Thursday, Oct. 30, 2025, at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — John Vander Ark
• Chief Financial Officer — Brian DelGhiaccio
• Vice President, Investor Relations — Aaron (full legal surname not provided in transcript)

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RISKS

• Environmental Solutions revenue declined by $32 million in Q3 2025, with management attributing performance to “continued softness in manufacturing activity, lower event-driven volumes in our landfills, which includes E&P activity, and fewer emergency response jobs.”
• Year-to-date event-driven landfill volume revenue totaled approximately $100 million at an 80% incremental margin for 2025, which management said “will not repeat in 2026” according to John Vander Ark and should be considered in forward growth assumptions.
• Recycling commodity prices dropped to $126 per ton in Q3 2025 from $177 per ton in Q3 2024, with the CFO noting a sequential decline to approximately $120 per ton exiting Q3 2025.
• Organic volume decreased total revenue by 30 basis points and related revenue by 40 basis points in Q3 2025, reflecting demand weakness in construction and manufacturing and intentional shedding of underperforming contracts.

TAKEAWAYS

• Revenue Growth – Revenue increased 3.3% in Q3 2025, despite ongoing softness in key end markets.
• Adjusted EBITDA – Adjusted EBITDA grew by 6.1% in Q3 2025, with adjusted EBITDA margin expanding 80 basis points to 32.8% at the enterprise level.
• Adjusted EPS – Adjusted earnings per share reached $1.90.
• Adjusted Free Cash Flow – Year-to-date adjusted free cash flow totaled $2.19 billion for the nine months ended Q3 2025.
• Customer Retention Rate – Retention remained high at 94%.
• Average Yield on Revenue – Average yield on total revenue was 4%, and average yield on related revenue was 4.9%.
• Core Pricing – Core price on total revenue was 5.9%, and on related revenue was 7.2% in the third quarter, separated into open market at 8.6% in the third quarter and restricted at 4.8%.
• Organic Volume Effect – Organic volume changes decreased total revenue by 30 basis points in Q3 2025, which included a 45% increase in C&D landfill volume ($35 million) and an 18% increase in landfill special waste revenue.
• Environmental Solutions Performance – Segment reported a 140 basis point revenue headwind in Q3 2025 and a $32 million decline in revenue compared to the prior year, with adjusted EBITDA margin at 20.3%.
• Recycling Commodity Prices – Average recycling commodity prices settled at $126 per ton, down from $177 per ton in the prior year.
• M&A Activity – Over $1 billion deployed in strategic acquisitions year-to-date, with a strong continuing acquisition pipeline across both major business areas.
• Shareholder Returns – $1.13 billion returned to shareholders through dividends and buybacks year-to-date.
• Capital Expenditures – Year-to-date capital expenditures of $1.18 billion represented 62% of the projected full-year spend.
• Leverage and Liquidity – Total debt ended at $13.4 billion with $2.7 billion in liquidity, and a leverage ratio of approximately 2.5 times.
• Event-Driven Revenue – Event-driven landfill revenues year-to-date totaled $100 million for the nine months ended Q3 2025, with quarterly contributions of $12 million in Q1 2025, $53 million in Q2 2025, and $36 million in Q3 2025.
• Labor Costs and Productivity – $56 million in labor disruption costs were fully captured in Q3 2025, with labor as a percent of revenue improving by 70 basis points.
• Sustainability Initiatives – 137 electric collection vehicles were in operation at the end of Q3 2025, with a target of more than 150 EVs by year-end and 32 sites with commercial-scale EV charging.
• Polymer Centers Update – Commercial production commenced at the Indianapolis Polymer Center in July, with Blue Polymers commercial production expected to begin late in the fourth quarter.
• Renewable Energy Projects – Six energy projects commenced this year, with a seven-project total expected to be operational in 2025.

SUMMARY

Republic Services (RSG 0.80%) management signaled that the core long-term growth algorithm remains intact, with expectations for mid-single-digit revenue growth alongside higher rates of EBITDA and free cash flow expansion, as reiterated by management for 2026, but flagged that tough comps and the non-recurrence of event-driven landfill revenue in 2025 will moderate year-over-year results in 2026. There is evidence of stabilization, rather than acceleration, in both Environmental Solutions and manufacturing-oriented segments, as activity levels began to recover following a summer trough. The capital allocation approach remains unchanged, with opportunistic share repurchases and a consistent commitment to acquisitions in pipeline verticals, supported by robust liquidity and manageable leverage.

• CEO Vander Ark stated, “The long-term growth algorithm of mid-single-digit revenue growth, with EBITDA growing faster than revenue and free cash flow growing faster than EBITDA, we think holds, according to management’s initial perspective regarding 2026,” but also noted that event-driven volumes generated approximately $100 million in high-margin revenue in 2025, which will not recur in 2026.
• CFO DelGhiaccio confirmed, “There was an impact on revenue. About $16 million worth of credits were recognized, which reduced the reported revenue,” in relation to labor disruption and union contract settlements.
• Management expressed that the Environmental Solutions pipeline is expanding, and while the segment was “down both sequentially and year-over-year,” demand had stabilized by the end of the quarter, with “the year-over-year decline starting to modulate.”
• In pricing, open-market core price was 8.6%, with Vander Ark citing continued “upward pressure on price” in Environmental Solutions and an ongoing focus on optimizing the price-volume tradeoff for both recurring and event-based business.

INDUSTRY GLOSSARY

• C&D (Construction and Demolition): Waste or debris generated from construction, renovation, or demolition of buildings, roads, and other structures; often a distinct revenue source for landfill and hauling operations.
• E&P (Exploration and Production activity): Waste, often hazardous or special, originating from oil and gas extraction or processing, typically handled as part of Environmental Solutions revenue.
• MRF (Materials Recovery Facility): Specialized facility for sorting, processing, and shipping recyclable materials collected from waste streams.
• Polymer Centers/Blue Polymers: The company’s proprietary facilities and joint ventures dedicated to advanced plastics recycling and circularity; focus on upgrading plastic scrap to high-value feedstocks for manufacturing.
• RNG (Renewable Natural Gas): Biogas captured from landfills or organic waste, processed to pipeline-quality methane, and used as a renewable energy source; a growth focus for the company in renewable energy projects.

Full Conference Call Transcript

John Vander Ark, our CEO, and Brian DelGhiaccio, our CFO, are on the call today to discuss our performance. I would like to take a moment to remind everyone that some information we discuss on today’s call contains forward-looking statements, including forward-looking financial information, which involve risks and uncertainties and may be materially different from actual results. Our SEC filings discuss factors that could cause actual results to differ materially from expectations. The material that we discuss today is time-sensitive. If in the future you listen to a rebroadcast or recording of this conference call, you should be sensitive to the date of the original call, which is 10/30/2025.

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

John Vander Ark: Thanks, Aaron. Good afternoon, everyone, and thank you for joining us. We delivered strong third-quarter results, which highlight the consistency of our business model, disciplined operational execution, and the power of our portfolio. Even with persistent headwinds in construction and manufacturing end markets, we generated solid earnings growth and margin expansion. Continued investment in our differentiated capabilities positions us well to drive sustainable growth and enhance long-term shareholder value. During the quarter, we achieved revenue growth of 3.3%, generated adjusted EBITDA growth of 6.1%, expanded adjusted EBITDA margin by 80 basis points, delivered adjusted earnings per share of $1.90, and produced $2.19 billion of adjusted free cash flow on a year-to-date basis.

Our commitment to delivering world-class service continues to support organic growth by reinforcing our position as a trusted partner for our 13 million customers. Our customer retention rate remains strong at 94%. We saw continued improvement in our Net Promoter Score, which reflects our team’s commitment to delivering products and services that customers value. Organic revenue growth during the third quarter was driven by strong pricing across the business. Average yield on total revenue was 4%, and average yield on related revenue was 4.9%. Organic volume decreased total revenue by 30 basis points and related revenue by 40 basis points in the quarter. Volume performance included outsized C&D and special waste land activity.

The increase in C&D tons related to hurricane recovery efforts in The Carolinas. Special waste activity was driven by an increase in event-based volumes across many of our disposal assets, primarily located in Sunbelt geographies. These volumes were offset by a decline in the collection business. The decrease in collection volumes related to continued softness in construction and manufacturing end markets and shedding underperforming contracts in the residential business. Organic revenue decline in the Environmental Solutions business created a 140 basis point headwind to total company revenue this quarter. Environmental Solutions performance was impacted by three primary factors: continued softness in manufacturing activity, lower event-driven volumes in our landfills, which includes E&P activity, and fewer emergency response jobs.

Given the relatively fixed cost structure of these assets and services, the impact on Environmental Solutions EBITDA and margin was more pronounced. While the Environmental Solutions business was down both sequentially and year-over-year, demand stabilized exiting the third quarter. Our pipeline for new business is now expanding, and we remain well-positioned to capture growth opportunities as market conditions improve. Importantly, despite these headwinds in Environmental Solutions, we delivered over 6% growth in adjusted EBITDA and expanded adjusted EBITDA margin by 80 basis points at the enterprise level. These results reflect disciplined pricing of cost inflation, strong operational execution, and effective cost management. Moving on to sustainability.

We are making progress on the development of our Polymer Centers and Blue Polymers joint venture facilities. In July, we commenced commercial production at our Indianapolis Polymer Center. This operation is co-located with a Blue Polymers production facility. We expect commercial production to begin at the Blue Polymers facility late in the fourth quarter. We are advancing renewable natural gas projects with our partners. One project came online during the third quarter. We have commenced operation at six energy projects this year. We expect a total of seven RNG projects to commence operations in 2025. We continue to advance our commitment to fleet electrification. We had 137 collection vehicles in operation at the end of the third quarter.

We expect to have more than 150 EVs in our fleet by the end of the year. We currently have 32 facilities with commercial-scale EV charging infrastructure. This infrastructure investment will support continued growth of this differentiated service offering. As part of our approach to sustainability, we strive to be the employer where the best people want to work. We continue to have high employee engagement scores, and our turnover rate continues to trend lower compared to the prior year. With respect to capital allocation, we’ve invested more than $1 billion in strategic acquisitions on a year-to-date basis. Our acquisition pipeline remains supportive of continued activity in both the recycling and waste and environmental solutions businesses.

Year-to-date, we have returned $1.13 billion to shareholders through dividends and share repurchases. I will now turn the call over to Brian, who will provide additional details on the quarter.

Brian DelGhiaccio: Thanks, John. Core price on total revenue was 5.9%. Core price on related revenue was 7.2%, which included open market pricing of 8.6% and restricted of 4.8%. The components of Core Price on related revenue included small container of 9.2%, large container of 7.1%, and residential of 6.8%. Average yield on total revenue was 4%, and average yield on related revenue was 4.9%. Third-quarter volume decreased total revenue by 30 basis points and decreased related revenue by 40 basis points.

Volume results on related revenue included a 45% increase in landfill construction and demolition or C&D volume, driven by $35 million of hurricane cleanup activity in The Carolinas, and an 18% increase in landfill special waste revenue driven by volume growth across many of our disposal assets. Year-to-date, we recorded approximately $100 million of event-driven revenue associated with hurricane and wildfire cleanups. We estimate these volumes will result in a full-year adjusted EBITDA margin benefit of 30 basis points. Large container volumes declined 3.9%, primarily due to continued softness in construction-related activity in most manufacturing end markets, and residential volume declined 2.4% due to shedding underperforming contracts. Moving on to recycling.

Commodity prices were $126 per ton during the quarter, compared to $177 per ton in the prior year. Recycling processing and commodity sales decreased organic revenue growth by 20 basis points. Increased volumes at our polymer centers and reopening a recycling center on the West Coast partially offset the impact of lower recycled commodity prices. Current commodity prices are approximately $120 per ton. Total company adjusted EBITDA margin expanded 80 basis points to 32.8%. Margin performance during the quarter included a 40 basis point increase from previously noted event-driven landfill volumes and margin expansion in the underlying business of 90 basis points.

This was partially offset by a 20 basis point decrease from net fuel, a 20 basis point decrease from recycled commodity prices, and a 10 basis point decrease from acquisitions. Adjusted EBITDA margin in the Recycling and Waste business was 34.3%, which was up 150 basis points compared to the prior year. With respect to Environmental Solutions, third-quarter revenue decreased $32 million compared to the prior year, driven by softness in manufacturing end markets, lower event activity, and softer E&P volumes in The Gulf. Adjusted EBITDA margin in the Environmental Solutions business was 20.3%. Year-to-date adjusted free cash flow was $2.19 billion. Our strong performance reflects EBITDA growth in the business and the timing of capital expenditures.

Year-to-date capital expenditures of $1.18 billion represent 62% of our projected full-year spend. Total debt was $13.4 billion, and total liquidity was $2.7 billion. Our leverage ratio at the end of the quarter was approximately 2.5 times. With respect to taxes, our combined tax rate and impact from equity investments in renewable energy resulted in an equivalent tax impact of 21.2% during the quarter. I will now hand the call back to John.

John Vander Ark: Thanks, Brian. Through the cycle, we believe our business can consistently deliver mid-single-digit revenue growth and grow EBITDA, EPS, and free cash flow even faster. This generally produces 30 to 50 basis points of EBITDA margin expansion per year. This growth assumption is supported by pricing ahead of underlying costs, selling our comprehensive set of products and services, and capitalizing on value-creating acquisition opportunities. We also expect financial contribution from investments made in sustainability innovation, including plastic circularity, and our renewable natural gas projects. Our initial perspective regarding 2026 is that the long-term growth algorithm is intact.

As a reminder, we reported approximately $100 million of revenue at an 80% incremental margin related to landfill volumes in 2025 that will not repeat in 2026. This should be reflected in year-over-year growth assumptions. We plan to provide full-year 2026 guidance on our earnings call in February. With that, we can now open the call to questions.

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

Tyler Brown: Hey, good afternoon, guys.

John Vander Ark: Hey, Tyler.

Tyler Brown: Hey, John. I just want to make sure I have it big picture. I appreciate the color right there at the end of the prepared remarks. So the long-term algorithm, mid-single-digit revenue, hopefully EBITDA free cash flow faster than that. So when you think about as we go into 2026, and I think you kind of alluded to that, is that including the headwinds with the special with the event-driven volumes? And then we also are going to have a fairly sizable commodity headwind if we snap the line today. So can you just talk a little bit about the puts and takes into ’26?

John Vander Ark: Yeah. As you know, we’re not giving guidance for ’26, but I’ll give you some markers in the spirit of your question. Listen. The long-term growth algorithm of mid-single-digit growing EBITDA growth or EBITDA faster than revenue and free cash flow faster than EBITDA, we think holds. We’re coming over tougher comps, so that probably just takes each of those down a click. Going into ’26, and that’s predicated on remaining pretty conservative on the macro. But also understanding what our pipeline looks like and how well performing we are in the fundamentals of the business. I think that’s you know, shapes our perspective into 2026. And that would certainly include overcoming that commodity headwind as well.

Tyler Brown: Okay. Helpful. And then Brian, just on the event-driven volumes, just want to make sure I have it kind of by quarter. Was it something like Is that roughly right? $10 million of revenue in Q1 and then $55 million in Q2 and $35 million in Q3?

Brian DelGhiaccio: Yeah. So it’s rough it was it was $12 million of revenue Q1, $53 million Q2, $36 million in Q3, total of $100 million.

Tyler Brown: Okay, perfect. And then just my last one, you guys have been very realistic around the volume environment. It does look like ES slowed down. It accelerated on the to the downside. Just kind of what are you seeing out there in the market? Is that largely related to project work? And then if I look at the EBITDA flow through, I think it was almost a one-to-one revenue to EBITDA flow through. I know hazardous landfills have very high flow through, but was there something else driving that contribution margin?

John Vander Ark: Yeah. The I think it’s a confluence of events. Like, the macro manufacturing continues to be very slow, and we see that in the recycling and waste business too, when large container halls. Again, we’re gaining share in that area, but, you know, volume is slowing down just because plan output is down in that space. So that’s part of it. We’re seeing delayed project-based work, a lot of reoccurring work like turnarounds. Or tank clean outs. People are just pushing those. And the good news is those come Those don’t get delayed forever. And then, you know, good news for the macro society, bad news for us just been a very slow emergency response here across the board.

Activities have been pretty low across the board. So all of those things are feeding into it.

Brian DelGhiaccio: Yeah. And, Tyler, to your question just on the margin, you’re right. It is falling through. Almost at the amount of the revenue decline. That is not just due to revenue itself. There were some unique costs. We called out last year that we had a bad debt recovery about $4 million that was somewhat, you know, out of period. This year, we had a legal settlement which added a couple million dollars worth of cost. So that added $6 million spread between the two years, about a 140 basis point impact on margin year over year.

Tyler Brown: Okay. Okay. Yep. No, that’s very helpful. Okay. Thank you, guys.

Operator: The next question will come from Noah Kaye with Oppenheimer and Company. Please go ahead.

Noah Kaye: Thanks for taking the questions. The open market pricing strength looked good again this quarter. Maybe just update us on how you see price cost spread heading into year-end here and kind of the runway for 2026?

John Vander Ark: Yeah. Positive. I mean, we’ll think about cost inflation kind of roughly in line with what you think about CPI. Broadly speaking, there’s a few puts and takes. Underneath that, but at the aggregate, that’s fair. And then we’ll think about kind of a yield number that’s, you know, 75 to 100 basis points above that.

Noah Kaye: That’s a great place to model from. I guess, switching gears, you know, there was one competitor this week that took an impairment charge, related to a plastics facility. I know it’s different technology, but as you look at what’s happened with commodity pricing, how do you think about return expectations, for the polymer centers?

John Vander Ark: Yeah. We’re excited. Listen. They you know, the these projects typically have challenges on two ends. One is the supply end, and I’m sure we have advantage because we get something off the ground five nine times every day. And the other is on the demand end. And the demand end from a both a pricing and a volume standpoint has been very strong. And the spread between the input and the output on this side has been really consistent. In fairness, it’s taken us a little longer on the ramp-up of these projects to get to full capacity and full output, and that’s just the normal learning curve of you know, new facility starting up plants is challenging.

But feel really good about our long-term assumptions there and excited to see Indy come up the curve and Allentown open up next year.

Noah Kaye: Mhmm. Mhmm. Excellent. Thank you. I’ll turn it over.

Operator: Your next question will come from Sabahat Khan with RBC Capital Markets. Please go ahead.

Sabahat Khan: Great. Thanks, and good afternoon. I guess just as you kind of think about 2026 and you call that acquisitions as one of their generally contribute here. How is the pipeline looking relative to this year? Obviously, big year this year. Can just talk about kind of the magnitude or how full that is and then mix across your different silos? You know, historically, we’ve talked about just keeping it more balanced, but just how’s that looking right now? Thanks.

John Vander Ark: Yeah. Pipeline looks very strong. We expect to you know, finish the year strong and start out next year strong. The exact balance of when things close end of the year or into the first half of next year, we’ll see. And then the pipeline behind that things that would be more likely to close in the second half is still very full. And that’ll be a balance across both recycling and waste and ES. You know, tilted towards recycling and waste, but we’ll look for opportunities on all ends.

Sabahat Khan: Great. And then, you know, you provided some benchmarks around 2026. You know, is it really just going to be on the environmental services side, kind of the of the event-driven volumes that really swing how that segment performs? Or do have any sort of visibility on how the next year could evolve relative to this year? Just some high-level perspective on what you’re saying.

John Vander Ark: Yeah. Listen, we’ll forecast to grow that business next year even in what we again, we’ll remain conservative on the macro and that continue to be sluggish. The pipeline, again, Brian mentioned or we mentioned in the prepared remarks, that the pipeline is building. And most of our challenges here have been macro. But we all we talked last quarter. We haven’t always gotten it quite right in terms of the price volume trade-off. And we’ve taken a lot of price over the last three years in this business. And we will continue to put upward pressure on price.

Being said, for some of these opportunities, finding the market and the right balance we’ve probably overshot that as the team’s working hard and that’s why the pipeline is building to get that get that pricing right.

Sabahat Khan: Great. Thanks very much.

Operator: The next question will come from Bryan Bergmeier with Citi. Please go ahead.

Bryan Bergmeier: The questions. Yes, I mean, following up on some of the questions on ES. Can you maybe give us a sense of your expectations for the fourth quarter for that business? Should we continue to expect kind of those mid-single-digit declines in the top line or just the pipeline that you’re mentioning and building sort of start to come through? And then I guess on a sequential basis, margins kind of step down from 3Q to 4Q normally. I’m just not sure if that’s generally how you’re thinking about it.

John Vander Ark: Yeah. We think we’ve kinda found the bottom on this thing that we’re coming over overcoming a pretty tough comp from the fourth quarter to last year. We had a major ER job. That, you know, came in at pretty high incremental margin on that front. But I think about margin performance that kinda looks in the same ZIP code, and then we’re we build up from that in 2026.

Bryan Bergmeier: Got it. Got it. Thanks for that detail. And then just one follow-up is, you mentioned you acquired recycling facility in California during the quarter. I think that’s a little bit different than your Polymer Centers. It’s maybe more of a reclaimer. I think that does that kinda sit between your Polymer Centers and your MRFs? I’m just sort of curious what the incremental opportunity is there and is there more opportunities like that as Republic tries to build out their national kind of plastics recycling network? Just overall thoughts on the M and A environment around plastics. Thanks. I’ll turn it over.

John Vander Ark: Yeah. That ended up being pretty opportunistic and unique. It’s connected to the West Coast Polymer Center. And gets us, you know, plugged into the really, the bottling value chain there. Over time, we’ll look for more m and a in the space. I think in the very near term, you’re unlikely to see more opportunities there. Just because we’ll be focused on executing the Palmer Center and getting Indy fully up the curve, getting Allentown on pace and then the Blue Palmer JVs. And then over time, there’ll be an M and A but I would think more about 27 and beyond there versus 26.

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

Kevin Chiang: Hey, thanks for taking my question. Maybe just on some of the labor disruption you had in the quarter, you or maybe the first half of the year, you called out about $56 million in cost. Just wondering if there’s any residual impact as we think of Q4 into next year related to credits or any type of you know, revenue adjustments you make is as you kind of rebuild goodwill with some of these customers that face that disruption as think of revenue trends in the next few quarters here?

John Vander Ark: Yeah. Kevin, we think we mostly captured the impact of that including the revenue credits themselves. So we think at this point, the $56 million that we recorded in the third quarter will be it. At this point, yeah, we think we’re done.

Kevin Chiang: Oh, perfect. That’s thanks for clarifying. And just on the EV targets, you know, you provide us with the update every quarter here. It does feel like OEMs are deprioritizing the production of their electric electrification strategy. Just I guess, do you think that impacts these longer-term targets you have? It feels like you still feel pretty confident that can get the vehicles you want despite maybe OEMs de prioritize this propulsion system?

John Vander Ark: Yeah. No. We feel really good about our, you know, partners in the space and, you know, customer demand for it. And we think it provides really unique benefits of a zero-emission vehicle and know, cities and communities are excited about it. I same time, we’re gonna do it in an economic fashion. Right? This isn’t just a sustainability investment. This is also a business investment.

And so because we lost a little bit of incentive here in the federal legislation, And, you know, that might slow our pace on the margin, but there’s other, you know, state and local incentives, and there’s certainly customers who are willing to pay the most important part of the equation that will allow us to continue So we’re gonna continue to march it out in communities where it makes sense.

Kevin Chiang: Perfect. Thank you for taking my questions.

Operator: Your next question will come from Trevor Romeo with William Blair. Please go ahead.

Trevor Romeo: Hi, good afternoon. Thanks for taking the questions. I had one kind of follow-up on, I guess, the overall kind of manufacturing industrial volume activity as it relates to both solid waste and ES. Just kind of wondering, was the softness in this quarter kind of about what you’d expected last quarter when you lowered the guidance? Or you talked about demand stabilizing exiting the quarter, maybe you could just walk us through kind of the monthly trends a little bit more or just any more color on that would be great.

John Vander Ark: Yeah. It probably since our last call and the first couple months after that, it was certainly, you know, more to the negative. Than our outlook was. And we’ve mentioned starting to stabilize and we think we found the bottom rebounding from here. There’s a ton of uncertainty out there for manufacturing and, you know, trade policy is top of the list. And I think you’re just seeing the rebound effect of those tariffs and people you know, prebuilding and prebuying to get ahead of the tariff. And then we’ve seen a slowdown in economic activity in a lot of sectors, pretty dramatically in June, July, August and started to see that pick back up.

And so that’s really what we’re facing in both sides of the business.

Trevor Romeo: Got it. Thank you, John. And then I guess on guess on capital allocation, you know, the buyback ramped up quite a bit in Q3. I think, you know, all the solid waste stocks have been trading kind of weaker since the quarter closed even. Should we think about buybacks continuing to be maybe a bigger driver with the stock at these levels or how are you thinking about that versus other uses of capital in the kind of near term?

John Vander Ark: Yeah. I would say we’ve always been opportunistic, and we look at it as a great opportunity to create value for our shareholders. So we were a buyer and I would expect us to be a buyer going forward.

Trevor Romeo: Okay. Thank you very much.

Operator: The next question will come from Tobey Sommer with Truist. Please go ahead.

Jasper Bibb: Jasper Bibb on for Tobey. I just wanted to ask about expense and expense inflation trends. Any early indication on what you’re anticipating price cost spread in ’26? Noticed your labor COGS actually declined year over year this quarter, so maybe a favorable indicator there.

John Vander Ark: Yes. Mentioned earlier, we think about, you know, pricing coming down relative, but also cost coming down. But maintaining a price cost spread in recycling waste business of 75 to 100 basis points and have pretty good outlook and confidence of that going into 2026.

Jasper Bibb: Got it. And then maybe following up on ES, have you seen any retention impacts at your customers based on the pricing increases you’ve taken over the past couple of years?

John Vander Ark: There’s certainly been some churn, and we that all the time in the recycling and waste business too as we’ve improved margin in that space. We’ve also seen the return of customers. And that understanding that low price doesn’t always mean the best value. Upfront. I’d say where we’ve gotten the price volume equation just, you know, slightly off, is more of the event-based work. That we’ve missed out on some opportunities. So it’s not pricing, you know, recurring revenue customers out. It’s event-based opportunities that we think we’re gonna be able to be more competitive going forward.

Jasper Bibb: Got it. Thanks for clarifying that.

Operator: Your next question will come from Toni Kaplan with Morgan Stanley. Please go ahead.

Yehuda Silverman: Hi. This is Yehuda Silverman on the line for Toni Kaplan. Just had a quick question about some of the cost uptick specifically for fuel and landfill operating costs in the quarter. Just wondering if this was tied to anything specific or if it’s nothing really to focus too much on.

Brian DelGhiaccio: Yeah. Look. If you’re looking just at a year-over-year basis, yeah, some of that again, you it’s a combination of both. You’ve got price, but you also have volume due to acquisitions. So I would say neither of which are going to be, you know, anything significant or out of the norm. Because if you look at the percent of revenue, for example, fuel is relatively flat.

Yehuda Silverman: Got it. And just had a question on commodities in general. So were the commodity headwinds this quarter worse than expected? And is there any way to sort of hedge or counteract weaker price? And commodities?

Brian DelGhiaccio: Well, I mean, commodity prices ticked down, right, throughout the quarter. So when we were exiting Q2, they were in, like, the $140 range. You know, 135, 140, and, you know, they can kinda see for the average for Q3. ’26, actually about a 120. Right? So they have been stepping down sequentially. That’s when you think about getting a third-party hedge, it’s a pretty thin market quite honestly. So more of what we’ve done is we’ve moved the model to charge the fee for service. So for the collection itself of those materials or the processing of the material, at one of our third-party facilities, we’re charging the fee.

And then we split with our customers the ultimate sale of the commodity. So, again, we’re earning a good return on the services we’re providing, and you accept some level of volatility with the ultimate commodity sale. But that’s just inherent to the business.

Yehuda Silverman: Got it. Thanks.

Operator: The next question will come from Rob Wertheimer with Melius Research. Please go ahead.

Rob Wertheimer: Thanks and good evening. You just touched on this a minute ago, but ex the labor one-offs, productivity actually looked pretty good in one of your better quarters. There anything to call out there? Or is that normal variability?

Brian DelGhiaccio: Well, no. Labor productivity, I say, you take a look at labor as a percent of revenue, just in the quarter, we’ve seen improvement of 70 basis points. Yeah. Right? You know, on that front. So that’s gonna be a continuation of the benefits that we’re getting from a Rise platform where we’re producing productivity benefits within our collection business. But also just as we’ve said, when you think of the margin expansion, a lot of that is the price in excess of your cost inflation. So with labor being one of your largest cost inputs, the place where you’re gonna see that the most is labor improving as a percent of revenue.

Rob Wertheimer: Totally fair. Thank you. And then just a small one, you touched on manufacturing and some of the we’ve seen that in the industrial world. Any there’s a lot of cross currents in construction. Any trend line you saw through the quarter? You got interest rate cuts, you got large projects, you lots of cross currents. So was just curious if there’s any movement direction or the other. Thank you.

John Vander Ark: No. Not yet. Haven’t really seen signs of life. Can we remain like, in the longer term, very bullish, medium to longer term on construction? In terms of single-family, multifamily, feel there’s a lot of pent-up demand in most of the markets across our thousand dots on the map in The US and Canada. Yeah. I think we probably need just a little more time before we start to see that take off.

Rob Wertheimer: Thank you.

Operator: Your next question will come from David Manthey with Baird. Please go ahead.

David Manthey: Thank you. Good afternoon, everyone. To Environmental Solutions. When you talk about stabilization, I just trying to understand definitionally. Are you saying that the declines should start lessening here? Or are you talking about absolute revenues sort of flattening sequentially from 3Q to 4Q?

Brian DelGhiaccio: Yeah. I would say a little bit of both. Right? So again, at the same time, we saw just from an overall revenue perspective, and look, one month doesn’t make a trend, but September was better than August, and we’re starting to see something look similar in October from an overall revenue perspective. And then you think about just the year-over-year, that would just naturally lend it itself to the year-over-year decline starting to modulate. Now John mentioned earlier, one of the things you have to remember is last year, we had almost $50 million of revenue in the quarter from a single emergency response job. Right? So that’s something that we have to anniversary.

So that’s gonna create a tough comp, and about $15 million of that carried over into Q1. So you don’t get that out of the numbers from a year-over-year perspective until we get into ’26.

David Manthey: Right. Okay. That’s that’s great color sequentially. And then looking back to the ECOL data back in 2021, has the data changed much in terms of the top verticals in environmental solutions? So is it still chemicals, metals, and general manufacturing making up don’t know, 40, 45% of the total?

John Vander Ark: It’s a very diversified set of end markets. We probably don’t cut it exactly the same way that the legacy company did. But very strong. You know, manufacturing will be the largest probably to fund. Chemicals, oil and gas, general continuous slow, production. But utilities, government, there’s a broad mix of end markets that we serve.

David Manthey: Got it. Thank you.

Operator: The next question will come from Stephanie Moore with Jefferies. Please go ahead.

Stephanie Moore: I wanted to ask maybe a higher-level question on the solid waste business as it relates to pricing. You know, I think you’re you guys as well as the industry continue to execute well on pricing and getting and getting good pricing, obviously, in the open market. As well. You know, as you think about the success that you’ve had in the open market, you know, what would you attribute the major drivers of that be? Do you think it just general rationality? I mean, obviously, inflationary, but we also hear a lot from, you know, general customers with price fatigue and inflation fatigue. So I’d love to get your updated thoughts.

I mean, is it your ability to capture price because of your technology investments? But I think just any updated thoughts on that would be helpful. Thank you.

John Vander Ark: Yeah. I think there’s a lot of elements to the equation. I’d say the most important one from a macro level, we’re a very, very small percentage of most customers’ cost structure. And in a macro sense, I think the industry is underpriced. Right? You think about a resident, their bill was less than their Starbucks bill every month, and we’re taking a $400,000 truck and driving it you know, taking it to a recycling center that costs $5,060,000,000,000 dollars to build or a landfill where we’re going to rent you a piece of real estate forever and probably produce electricity or gas. On the back end of that.

So I think the value proposition across the industry is phenomenal, and we’re getting a very small portion of people’s cost structure at so that creates a lot of pricing opportunity. I think if you kinda come down a level, look at our we focus really hard on customer mix. Some customers are very price sensitive and we under are underpenetrated in that part of the market, over penetrated, and customers who are willing to pay more for the value. And then have a lot of tools and sophistication in terms of how we price customers to make sure that they not only take the price, but they stay forever.

Stephanie Moore: Got it. Appreciate it. And then just one follow-up. On the M and A commentary. Appreciate the look into 2026. I wanted to also gauge your appetite in maybe doing a larger deal m and a at this time, whether in solid waste or within EF.

John Vander Ark: Yeah. We were we maintain a perspective on everything, alright, as fiduciaries of the business in that front. And I wouldn’t say anything is impossible. I’d also say our focus is on small and medium-sized deals as we look into the rest of 2025. But even in the ’26 and ’27, I feel like we’ve got a very strong pipeline in both in recycling and waste, Andy. Yes.

Stephanie Moore: Great. Thank you so much.

Operator: The next question will come from Shlomo Rosenbaum with Stifel. Please go ahead.

Shlomo Rosenbaum: Hi. Thank you for taking my questions. Just want to get straight a little bit about the commentary about things getting better in ES towards the end of the quarter. How much of it is your figuring out the issues with the pricing in specific areas? And how much of it is finding kind of a bottom and starting to improve? And then I just wanted to ask you a little bit about the pricing just in general. Do you feel like you, you figured out where you’re getting it not exactly on the mark? And is there a thought that we’ve kind of gotten to the point where we’ve the outsized pricing is kind of behind us?

Or is it really just those emergency response type stuff is really the only place where you feel like you’ve pushed it too far.

John Vander Ark: Yeah. Maybe let me start at the end. I think we’ve taken up margins fairly dramatically since we closed the U. S. Ecology acquisition. So tremendous progress. And that wasn’t all price, but a lot of that was price. And we think there’s certainly more room to go. We’re facing, obviously, a very challenging demand environment. And so getting that balance right, primarily on event-based work, but it’s certainly an opportunity for us and the team. Part of this is just that this industry itself is at a different stage of evolution and maturity than the recycling waste industry.

Where we’ve been at recycling waste a long time in terms of the tools, sophistication, commercial capabilities of our sales team to get that balance just right to try to win the job of maximize price. And we’re still climbing the ladder on the environmental solution side of the business. And if you work your way back into what kind of momentum we’re seeing, I think we are seeing certainly a stabilization of the overall market. Not strength and rapid recovery, but a stabilization. And then you layer on top of that, and we’re our level of speed, we’re getting very, very dialed into specific opportunities, and those two things together, you know, give us a positive outlook.

Shlomo Rosenbaum: Okay. And then just overall in pricing, you said you’ve taken a lot over there. Would you say you were still in early innings, mid innings? Where do you feel you are in terms of that opportunity, ex the area where you’re know, kind of kind of recalibrating right now?

John Vander Ark: Yeah. I’d say longer term, we still think these assets are underpriced. These assets on the post-collection side, these assets are impossible to replicate. And we sell things here rather than price by the ton often times by the pound or sometimes by the ounce. And so we think there’s plenty of room to go. We’ve also said this isn’t gonna be a straight line of progress. There’s gonna be ebbs and flows on our path. And so in any given quarter, like the one we just saw, there might be a little bit of pullback. And I think if you measure this thing very narrowly, you know, quarter to quarter, I think you’re gonna miss the picture.

If you measure it year over year, I think you’re gonna get a much better view of where we think progress in this business goes.

Shlomo Rosenbaum: Okay. Great. Thank you.

Operator: Your next question will come from William Griffin with Barclays.

William Griffin: Great. Thanks for the time. Just wanted to come back to the union contract settlement here. Was there any impact, I guess, from the strikes revenue in the quarter? I know you made the adjustment to EBITDA, but just wondering if there’s any impact on the revenue side. And then any sort of outlook in terms of cost inflation in ’26 related to that contract sort of relative to your expectations in your commentary?

Brian DelGhiaccio: Let me take the first part there. So there was an impact on revenue. There was a recognition of about $16 million worth of credits. Which reduced the reported revenue. Now when you look at adjusted EBITDA, well, we didn’t adjust the revenue. We did include those credits in the adjusted EBITDA. So the add back of $56 million includes those $16 million worth of revenue credits. In order to drive adjusted EBITDA.

John Vander Ark: In terms of longer-term impact on labor, we think the answer is no. We work very hard for the our frontline people are represented by a union contract or not. That we’re keeping them in line, and we want our people to be amongst the best paid in the local market. In which they operate. But it’s very critical for us to make sure that they’re not out of market. And when people get out of market, right, it hurts everybody. We lose work, and we ultimately have to let go of drivers technicians. So getting that number right is important to us, and that’s why we took the stand we did this past year on the set of contracts.

But going forward, we feel like we’re in a very good position to maintain our price cost spread as we talked about before.

William Griffin: Appreciate that. And then just coming to the ES business, you mentioned in your pipeline possibly having some opportunities related to M and A for ES. Any additional color you could provide there on what types of assets or services that you might be looking at?

John Vander Ark: Sure. Yeah. Certainly look for certain verticals that we’re in that we’d like to get in further. So life sciences and biopharma and high-tech are certainly attractive to us, and we’ve got great positions regionally, but not, not in every region. There’s plenty of field services locations geographically. We have really strong footprints in recycling and waste. But don’t have a field services location that creates an immediate cross-sell opportunity for us. And then we’re always interested in any post-collection assets. Anything with infrastructure, we feel is very attractive to the network as well.

William Griffin: Perfect. I appreciate that. I’ll pass it along. Thank you.

Operator: The next question will come from Tony Ba