Republic Services Q4 2025 Earnings Call Insights

Key Financial Highlights

Republic Services experienced a robust full-year revenue increase of 3.5 percent in 2025. In the fourth quarter, organic growth was propelled by an average yield of 3.7 percent on total revenue and 4.5 percent on related revenue streams. Adjusted EBITDA saw nearly 7 percent growth year-over-year, with margins improving by 90 basis points to reach 32 percent for the entire year. Adjusted earnings per share came in at $7.02 annually. Adjusted free cash flow reached $2.43 billion, marking an improvement with conversion rates climbing 200 basis points to 45.8 percent.

Customer retention remained steady at 94 percent, while the net promoter score showed positive progress. Organic volume dropped by 1 percent in the fourth quarter, with sharper declines evident in construction, manufacturing, and certain residential segments that underperformed. The Environmental Solutions division saw organic revenue pull total revenue down by 2 percent, largely because a significant emergency response project from 2024 did not recur.

Pricing efforts were strong, with core price on total revenue at 5.8 percent for the quarter. Core price on related revenue hit 7.1 percent, including open market pricing at 8.7 percent, restricted pricing at 4.6 percent, small container pricing at 8.8 percent, large container at 7.4 percent, and residential at 6.7 percent.

2026 Outlook and Projections

For 2026, the company anticipates revenue between $17.05 billion and $17.15 billion. Adjusted EBITDA is forecasted to range from $5.48 billion to $5.53 billion. Adjusted earnings per share are expected to fall between $7.20 and $7.28. Adjusted free cash flow projections stand at $2.52 billion to $2.56 billion. Acquisition investments totaled $1.1 billion in 2025, and plans for 2026 include around $1 billion, with $400 million already secured and factored into the guidance, contributing about 70 basis points to growth.

Recycling commodity prices averaged $112 per ton in the fourth quarter, down from $153 the previous year, and $135 per ton for the full year versus $164 prior. The 2026 baseline assumes $115 per ton. Fourth quarter adjusted EBITDA margin improved 30 basis points to 31.3 percent, with underlying business expansion of 80 basis points offset by 50 basis points from fuel, commodities, and acquisitions.

Employee engagement reached an impressive score of 87, surpassing national averages, and turnover hit record lows. Year-end total debt was $13.7 billion, with $2 billion in liquidity and a leverage ratio of roughly 2.6 times. The fourth quarter tax impact was 16.2 percent equivalent, full-year effective rate at 21.9 percent, and 2026 expectations include a 24 percent equivalent impact with 19 percent adjusted effective rate plus $190 million in noncash renewable energy charges.

Polymer centers and joint ventures generated $45 million in revenue and $10 million in EBITDA in 2025, projected to contribute $30 million revenue and $10 million EBITDA in 2026. Nine new renewable natural gas projects launched in 2025, with four more slated for 2026, expected to add $10 million each in revenue and EBITDA. Shareholders received $1.6 billion in returns, including $854 million in repurchases. The fleet now includes over 180 electric vehicles and 32 charging stations, with 150 more trucks planned for 2026. Inflation is projected at about 3.5 percent for next year, and first-quarter guidance accounts for $25 million January weather hit and $30-35 million overall.

Challenges and Risks

Organic volume is projected to reduce total revenue by around 1 percent in 2026, driven by continued residential declines and weakness in construction and manufacturing markets. Volume drops were focused in construction, manufacturing, and shedding low-performing residential accounts. Recycling commodity prices fell sharply to $112 per ton from $153. Landfill volumes from 2025 wildfires and hurricanes pose a 60 basis point drag on 2026 organic growth. Environmental Solutions revenue dropped $60 million in Q4, with $50 million from a non-repeating prior-year project. Employee utilization lagged in that segment due to slower demand, though labor was kept for anticipated future expansion.

Strategic Overview

Despite headwinds from recycling prices and volume softness, Republic Services achieved 3.5 percent revenue growth, nearly 7 percent adjusted EBITDA increase, and margin gains. Key drivers include persistent pricing strength, high customer retention, and investments in digital tools and sustainability. The 2026 guidance reflects low single-digit growth amid volume pressures, weather comps, emergency project lapping, and commodity challenges. Acquisitions and cost controls, boosted by AI efficiencies, support margin goals.

Acquisitions reached $1.1 billion in 2025, highlighted by assets like disposal infrastructure. Guidance includes $400 million closed, with $600 million more targeted. Core pricing on related revenue hit 7.1 percent, led by 8.7 percent open market. Capital plans allocate $1 billion to acquisitions. Environmental Solutions eyes flat growth with recovery from sales cycles and events. Fleet electrification advances with 150 new EVs. Polymer centers project stable spreads amid plastics softness. RNG aims for $100 million revenue and $120 million EBITDA run-rate by 2030. Inflation at 3.5 percent, with yields outpacing costs by 50-100 basis points. Free cash flow benefited from tax items, with normalization expected.

Industry Terminology

• Adjusted free cash flow: Represents cash flow from operations after capital spending, adjusted for one-off items, available for debt reduction, dividends, and buyouts.
• RNG (renewable natural gas): Biogas from landfills or waste, refined to pipeline quality for energy or fuel markets.
• Polymer center: Plants processing recycled plastics like PET into premium feedstock, often with partner facilities.
• Environmental solutions: Specialized services for hazardous/non-hazardous waste, site cleanups like PFAS, and emergency responses.
• Core price: Fixed rate hikes for repeat customers, excluding fuel or variable fees.
• Yield on related revenue: Price growth on core operations like collection, transfer, disposal, and recycling.
• E&P: Waste from oil/gas exploration/production, including liquid streams.

Full Earnings Call Transcript

Aaron Evans opened the call, introducing CEO Jon Vander Ark and CFO Brian DelGhiaccio. He cautioned that forward-looking statements carry risks, with details in SEC filings. Materials are time-sensitive as of February 17, 2026. The call is proprietary to Republic Services, with resources on their investor site.

Jon Vander Ark greeted participants, emphasizing the team’s strong 2025 results reflecting business resilience and unique strengths. High customer loyalty through superior service, cost management amid economic shifts, drove earnings growth and margin expansion. Key achievements: 3.5 percent revenue growth, nearly 7 percent adjusted EBITDA rise, 90 basis point margin gain to 32 percent, $7.02 adjusted EPS, $2.43 billion adjusted free cash flow, and 45.8 percent conversion up 200 basis points.

Positioned for growth via customer focus, digital innovation, and sustainability. Retention at 94 percent, NPS improving, shows service excellence. Q4 organic revenue grew via pricing: 3.7 percent total yield, 4.5 percent related. Volumes down 1 percent total, 1.2 percent related, hit by construction/manufacturing softness and residential pruning. Environmental Solutions organic revenue cut total by 2 percent, over half from non-repeating 2024 emergency job.

Digital investments in AI tools boost competitiveness, growth, profits, leverage. Advanced analytics optimize pricing by market attributes, aiding retention and churn reduction. RISE platform upgrade starts with large containers, using AI routing for safety, service, productivity, costs, experience. Digital handles 11 million annual calls, sending 70 million proactive notices in 2025 for holidays, weather.

Sustainability advanced with polymer centers and Blue Polymers JV. Indianapolis Polymer Center and colocated Blue Polymers started production in July and Q4. RNG progress: three Q4 online, nine total in 2025, four more in 2026. Fleet electrification leads industry: 180+ EVs, 32 chargers end-2025, 150 more in 2026. Employee engagement hit 87, turnover best ever.

Capital allocation: $1.1 billion acquisitions, $1.6 billion shareholder returns including $854 million buybacks. Results prove value creation in tough markets. 2026 guidance: revenue $17.05-17.15 billion, adjusted EBITDA $5.475-5.525 billion, EPS $7.20-7.28, free cash flow $2.52-2.56 billion. $1 billion acquisitions planned, $400 million already done and included, midpoint shows 3.1 percent revenue, 3.6 percent EBITDA, 3.1 percent EPS, 4.4 percent FCF growth.

Ex-weather/hurricane volumes, growth would be nearly 4 percent revenue, 5+ percent EBITDA, 50 bps margin, 6 percent EPS, 7 percent FCF, matching long-term algorithm. Brian detailed Q4: core price 5.8 percent total, 7.1 percent related (open 8.7 percent, restricted 4.6 percent; small container 8.8 percent, large 7.4 percent, residential 6.7 percent). Yields: 3.7 percent total, 4.5 percent related. 2026 related yield 4-4.5 percent (total 3.2-3.7 percent).

Volumes: Q4 total -1 percent, related -1.2 percent (large container -3.8 percent construction/manufacturing, residential -3 percent pruning). 2026 organic volume -1 percent total, with 60 bps headwind from prior cleanups. Recycling: Q4 $112/ton vs $153, flat sales via polymer volumes, West Coast restart. Full-year $135 vs $164, current $115 baseline. Q4 EBITDA margin 31.3 percent (+30 bps): underlying +80 bps, offset by fuel -10, commodities -20, acquisitions -20 bps. Full-year 32 percent (+90 bps), weather offset by those items.

Environmental Solutions Q4 revenue -$60 million ($50 million non-repeat), margin 20.1 percent consistent with Q3. D&A/accretion 11.6 percent revenue 2025/2026. FCF $2.43 billion, +11 percent on EBITDA, tax benefits. Debt $13.7 billion, liquidity $2 billion, leverage 2.6x. Interest $575-585 million. Taxes: Q4 16.2 percent equiv (timing), full 21.9 percent; 2026 24 percent equiv (19 percent adj + $190 million noncash).

Q&A Session

Operator introduced Q&A. First question from Patrick Tyler Brown, Raymond James. He asked about $400 million YTD acquisitions (e.g., Hamm’s in Kansas City for disposal/growth), $600 million pipeline (mostly Recycling/Waste, some Environmental Solutions), and contribution (70 bps to 2026 growth, $400 million included). On margins (32.2 percent midpoint, +20 bps), components include commodities, landfill comps, M&A; Q1/Q2 shaped by early comps, but core details provided.