Q4 2025 GFL Environmental Inc Earnings Call

February 11, 2026

Speaker #2: Good evening, everyone, and thank you for attending today's GFL fourth quarter 2025 earnings call. My name is Jasmine, and I will be your moderator today.

Speaker #2: All lines will be muted during the presentation portion of the call with the opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad.

Speaker #2: Three, you have about a 45 million drag from FX. But if I took all of those it feels like organic EBITDA is up maybe low to mid single digits.

Speaker #2: At this time, I would now like to turn the call over to Patrick Dovigi, founder and CEO of GFL. You may now proceed.

Speaker #2: And I realize that commodities and a few things are in there. But is that conceptually close? Because it feels—

Speaker #2: doable. Yeah, hi there.

Speaker #3: Thank you. And good afternoon. I would like to welcome everyone to today's call and thank you for joining us. This afternoon, we will be reviewing our results for the fourth quarter and providing our guidance for 2026.

Speaker #3: It's a great way of breaking it down. And thank you for doing my role for me. I think your directionally right. You seem to be taking just the good guys and not factoring in the bad guys, right?

Speaker #3: I am joined this afternoon by Luke Pelosi, our CFO, who will take us through our forward-looking disclaimer before we get into the details.

Speaker #3: So, a couple of things. That is a pure sort of EBITDA hit that you will sort of have. In that margin bridge, we have—recall Q1 '25, we enjoyed storm volumes in the Southeast associated with the hurricane.

Speaker #4: Thank you, Patrick. Good afternoon, everyone. Thank you for joining. We have filed our earnings press release, which includes important information. The press release is available on our website.

Speaker #4: During this call, we'll be making some forward-looking statements within the meaning of applicable Canadian and US securities laws, including statements regarding events or developments that we believe or anticipate may occur in the future.

Speaker #3: Very high margin contribution that you're not getting the benefit of that. So that's sort of distorting that bridge a little bit. And then on the EPR, well, 40 million I think was the right way of thinking about it at the beginning of '25 with the outperformance of '25 had.

Speaker #4: These forward-looking statements are subject to a number of risks and uncertainties, including those set out in our filings with the Canadian and US securities regulators.

Speaker #3: I think that number comes in a little inside on the '26 year-over-year comp. So if you normalize those, then I think you should get to a base business underlying organic EBITDA at the sort of mid to high single digits.

Speaker #1: Good evening, everyone, and thank you for attending today's GFL Q4 2025 earnings call. My name is Jasmine, and I will be your moderator today.

Speaker #4: Any forward-looking statement is not a guarantee of future performance and actual results may differ materially from those expressed or implied in the forward-looking statements.

Speaker #1: All lines will be muted during the presentation portion of the call, with the opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad.

Speaker #4: These forward-looking statements speak only as of today's date and we do not assume any obligation to update these statements whether as a result of new information, future events and developments, or otherwise.

Speaker #3: And as you said, we're feeling confident that that's something that could be achieved.

Speaker #1: At this time, I would now like to turn the call over to Patrick Dovigi, founder and CEO of GFL. You may now proceed.

Speaker #2: Okay, perfect. Thank you,

Speaker #2: guys.

Speaker #4: This call will include a discussion of certain non-IFRS measures. A reconciliation of these non-IFRS measures can be found in our filings with the Canadian and US securities regulators.

Speaker #1: Thanks,

Speaker #1: Tyler.

Speaker #4: Thank you. Our next question comes from Sabahat Khan with RBC. You may now

Speaker #2: Thank you, and good afternoon. I would like to welcome everyone to today's call and thank you for joining us. This afternoon, we will be reviewing our results for the fourth quarter and providing our guidance for 2026.

Speaker #4: I'll now turn the call back over to Patrick.

Speaker #4: proceed. Okay, great.

Speaker #3: Thank you, Luke. We started 2025 by presenting our strategy to drive best-in-class financial results and this year's results demonstrate we are doing exactly what we said we would.

Speaker #2: Thanks. And good afternoon. Just I guess just following up on the commentary around EPR, can you just maybe give us a little bit more color on the incremental growth capex investments that you're sort of calling out here?

Speaker #2: I am joined this afternoon by Luke Pelosi, our CFO, who will take us through our forward-looking disclaimer before we get into the discussion.

Speaker #3: Our relentless focus on value creation through the optimization of our existing platform is yielding results that are consistently ahead of expectations and our future has never been brighter.

Speaker #2: How does that sort of flow in through the course of the year? And just I guess in terms of the R&G side and the EPR side, it sounds like the contribution is still there, but just maybe how does that ramp for '26 and maybe into '27?

Speaker #3: Thank you, Patrick. Good afternoon, everyone. Thank you for joining. We have filed our earnings press release, which includes important information. The press release is available on our website.

Speaker #3: In 2025, we reached the historical milestone of 30% adjusted EBITDA margin for the first time in our company's history. This result is attributable to the tireless efforts of our 15,000 employees and ongoing contributions from implementing the operational priorities we highlighted at last year's investor day.

Speaker #3: During this call, we'll be making some forward-looking statements within the meaning of applicable Canadian and US securities laws, including statements regarding events or developments that we believe or anticipate may occur in the future.

Speaker #2: Thanks.

Speaker #3: Yeah, hey, Sabah, great question. Luke speaking here. The 175 is very front-end loaded. The expectation just so you know what's really coming on EPR this year is the collection side of the contracts and the majority of that is actually for the payment of said trucks.

Speaker #3: These forward-looking statements are subject to a number of risks and uncertainties, including those set out in our filings with the Canadian and U.S. securities regulators.

Speaker #3: Ongoing price discovery, along with the operational efficiencies, within our portfolio remain a core focus to drive appropriate returns for the high-quality services we provide.

Speaker #3: So I think you're expecting sort of a 100 to 120 of that in Q1 and then sort of trickles in through the balance of the year.

Speaker #3: Any forward-looking statement is not a guarantee of future performance and actual results may differ materially from those expressed or implied in the forward-looking statements.

Speaker #3: These forward-looking statements speak only as of today's date and we do not assume any obligation to update these statements whether as a result of new information, future events and developments, or otherwise.

Speaker #3: In 2025, we meaningfully outperformed our initial price expectations furthered our realization of the incremental pricing opportunities we identified at investor day. The pricing environment remains constructive and we are confident in our ability to continue to price at an appropriate spread above our internal cost of inflation.

Speaker #3: As we had alluded, R&G incremental contribution this year is more muted as projects have shifted to '27. So the R&G contribution in the current plan is pretty flat in terms of dollars with '25.

Speaker #3: This call will include a discussion of certain non-IFRS measures. A reconciliation of these non-IFRS measures can be found in our filings with the Canadian and US securities regulators.

Speaker #3: You have slightly higher levels of production at a slightly lower RIM price. And then the expectation is, sort of into '27 and '28, when you get the ramp of the tail of the R&G projects coming online.

Speaker #3: Q4 volumes were ahead of plan and we ended the year with 50 basis points of positive volume. A remarkable achievement considering the macro environment we're in.

Speaker #3: I will now turn the call back over to Patrick.

Speaker #2: Luke, thank you. We started 2025 by presenting our strategy to drive best-in-class financial results, and this year's results demonstrate we are doing exactly what we said we would.

Speaker #3: Growth spend in '27, the equivalent of that number, I think steps down significantly again. From where we are today, as EPR will largely be completed, and the R&G tail is relatively small.

Speaker #3: We see this differentiated outcome as yet another testament to the quality of our portfolio underpinned by our overall market selection and the execution of our returns-focused capital deployment strategy.

Speaker #2: Our relentless focus on value creation through the optimization of our existing platform is yielding results that are consistently ahead of expectations, and our future has never been brighter.

Speaker #3: Consistent with the third quarter, both operational and SG&A cost intensity continued to trend lower in the quarter and for the full year. The levers we outlined at investor day continue to contribute to this performance.

Speaker #3: So we'll advise on '27 as we get closer to it. But the expectation today is it's again a meaningful step down from this year.

Speaker #2: In 2025, we reached the historical milestone of 30% adjusted EBITDA margin for the first time in our company's history. This result is attributable to the tireless efforts of our 15,000 employees and ongoing contributions from implementing the operational priorities we highlighted at last year's investor day.

Speaker #2: Okay, great. And then just on the volume portion, it looks like you're guiding to modestly positive bit across some of the puts and volumes.

Speaker #3: Including enhanced operational efficiency, improving labor turnover, fleet optimization, and procurement benefits as a result of our greater scale. The combined impacts of these initiatives are apparent in the 30% adjusted EBITDA margin we achieved for the year.

Speaker #2: Can you maybe just break that out a little, takes? Any shedding left in that? And in addition, sort of, what are you seeing across some of the more cyclical end markets?

Speaker #2: Ongoing price discovery, along with the operational efficiencies within our portfolio, remains a core focus to drive appropriate returns for the high-quality services we provide.

Speaker #2: Is the situation maybe somewhat better than '25? If you can just kind of break out the volume piece a little bit.

Speaker #3: An industry-leading $130 basis point increase over 2024. To achieve such a result in the face of an ongoing macro headwind, reinforces our conviction in our stated goal of achieving low to mid-30s margins by 2028.

Speaker #2: Thanks. Yeah, I think we're giving the

Speaker #2: In 2025, we meaningfully expectations furthered our realization of the outperformed our initial price incremental pricing opportunities we identified at investor day. The pricing environment remains constructive and we are confident in our ability to continue to price at an appropriate spread above our internal cost of inflation.

Speaker #3: guide, Sabah, based on today's macro conditions, which has continues to be soft on the sort of C&D or industrial end. Now, I think there are some green shoots out there that may suggest there's opportunity above that.

Speaker #3: 2025 was also a transformative year in terms of our capital allocation strategy. The benefits which include the sale of our ES segment, simplified our business into a pure play solid waste leader, the evaluations achieved in both the ES transaction and recapitalization of GIP demonstrated the immense equity value we have created in both of these assets, our retained investment in these businesses allows GFL to continue to participate in meaningful value creation, the proceeds received from the divestitures and recapitalization allowed us to materially deliver our balance sheet and buy back over 10% of our own stock.

Speaker #3: And certainly, the benefit of that opportunity would be additive to the guide. If you think about the year for '25, Q1 started a little bit sort of stronger before some of the uncertainty was entered the macro environment.

Speaker #2: Q4 volumes were ahead of plan, and we ended the year with 50 basis points of positive volume—a remarkable achievement considering the macro environment we're in.

Speaker #3: And therefore, I think Q1 is a tougher comp. So we're expecting a negative volume number in Q1. And then that moderates, as you start lapping the sort of tougher quarters that we're sort of experienced in the back half of this year.

Speaker #2: We see this differentiated outcome as yet another testament to the quality of our portfolio underpinned by our overall market selection and the execution of our returns-focused capital deployment strategy.

Speaker #2: Consistent with the third quarter, both operational and SG&A cost intensity continued to trend lower in the quarter and for the full year. The levers we outlined at Investor Day continue to contribute to this performance.

Speaker #3: We do have the benefit of EPR coming in and contributing, and that is part of it. And then also, as Patrick alluded to, we still take a lot of pride in our market selection.

Speaker #3: And what I mean by that is a concentration of our revenues in the faster growing south and southeast markets where notwithstanding a perhaps more uncertain macro, you still do have volumetric growth by virtue of people moving and new business formation.

Speaker #3: We deployed nearly $1 billion into accretive M&A largely in the back half of the year providing an incremental tailwind as we head into 2026.

Speaker #2: Including enhanced operational efficiency, improved labor turnover, fleet optimization, and procurement benefits as a result of our greater scale. The combined impacts of these initiatives are apparent in the 30% adjusted EBITDA margin we achieved for the year.

Speaker #3: Regarding the share buybacks, recall that we originally intended to deploy $2.25 billion of the ES proceeds into share repurchases. A level of investment that we completed early in the first half of the year.

Speaker #3: So we're feeling good with the setup. I think there's multiple avenues of upside above what we have in here. But we're very pleased to be able to sort of report a year of positive volume, where I think the industry as a whole is probably slightly negative and to be able to reiterate that sort of positive outlook going into '26 as well.

Speaker #2: An industry-leading 130 basis point increase over 2024. To achieve such a result in the face of an ongoing macro headwind reinforces our conviction in our stated goal of achieving low to mid-30s margins by 2028.

Speaker #3: Due to the share price dislocation, the second half of the year, we saw additional share repurchases as a highly prudent use of capital to create shareholder value over the long term.

Speaker #3: As a result, we deployed an additional $750 million into incremental buybacks. Inclusive of both the $1 billion of M&A spend and the incremental share repurchases, we exited 2025 with the lowest year-end net leverage in our history.

Speaker #2: 2025 was also a transformative year in terms of our capital allocation strategy. The benefits which include the sale of our ES segment, simplified our business into a pure play solid waste leader, the evaluations achieved in both the ES transaction and recapitalization of GIP demonstrated the immense equity value we had created in both of these assets, our retained investment in these businesses allows GFL to continue to participate in meaningful value creation, the proceeds received from the divestitures and recapitalization allowed us to materially deliver our balance sheet and buy back over 10% of our own stock.

Speaker #2: And just maybe just a quick one, if I can sneak it in there, just on the capital allocation side, obviously, you have very big year on buybacks in '25.

Speaker #2: Sounds like the M&A pipeline is reasonably good. How do you guys sort of balance the two in terms of what seems more attractive on your analysis or just how you view it?

Speaker #3: With the benefits of the implementation of the capital allocation strategy in place, we enter 2026 with ultimate balance sheet flexibility. This setup, together with natural deleveraging from organic growth, will allow us to execute in a robust M&A pipeline while maintaining leverage in the low to mid-3s as arranged to what we remain highly committed.

Speaker #2: Thanks.

Speaker #3: Yeah, I mean, obviously, with the sell-off in the sector and sort of where we are, we continue to believe the stock is materially undervalued.

Speaker #3: That being said, we need to balance that. That could correct itself very quickly, and our expectation is that it will in time. So we also have to plan for the future and some of these opportunities that are in front of us.

Speaker #3: As for the base business guidance, Luke will walk us through the details, but it's exactly as we previously indicated. Recall that in 2024 and in 2025, we laid out an extremely detailed plan, raised the guide multiple times throughout the year, and beat our expectations on all financial metrics.

Speaker #2: We deployed nearly $1 billion into accretive M&A, largely in the back half of the year, providing an incremental tailwind as we head into 2026.

Speaker #3: And as we continue to work through the opportunities, we'll sort of outweigh and weigh against one another, but what we think the right thing to do is.

Speaker #2: Regarding the share buybacks, recall that we originally intended to deploy $2.25 billion of the ES proceeds into share repurchases. A level of investment that we completed early in the first half of the year.

Speaker #3: But just know that my 30 million shares are working beside every one of yours, so I'm going to do what's right for what I believe is sort of the long-term value creation for the business will be.

Speaker #3: We see multiple avenues of upside to our current 2026 guide and that gives us confidence in our ability to meet and potentially exceed the expectations for the year.

Speaker #2: Due to the share price dislocation, the second half of the year, we saw additional share repurchases as a highly prudent use of capital to create shareholder value over the long term.

Speaker #3: But last year was clearly obvious in the back half of the year that it was prudent to spend that incremental 750 million on share buybacks, just given where the stock was trading.

Speaker #3: Lastly, in 2025, we also progressed on our previously stated intention to maximize index inclusion opportunities. Last month, we announced the relocation of our executive headquarters to the US.

Speaker #2: As a result, we deployed an additional $750 million into incremental buybacks. Inclusive of both the $1 billion of M&A spend and the incremental share repurchases, we exited 2025 with the lowest year-end net leverage in our history.

Speaker #3: But that being said, we have a great pipeline as well, with good opportunities and markets where we're already operating. And we'll continue looking at both and weighing them as the opportunities continue to present.

Speaker #3: The relocation broadened our eligibility for participation in US equity indices while preserving our eligibility for inclusion in Canadian indices. We expect this strategy will help increase GFL's visibility with investors and ultimately drive a wider shareholder base.

Speaker #3: themselves. Thanks very

Speaker #2: With the benefits of the implementation of the capital allocation strategy in place, we enter 2026 with ultimate balance sheet flexibility. This setup, together with natural deleveraging from organic growth, will allow us to execute in a robust M&A pipeline while maintaining leverage in the low to mid-3s as arranged to what we remain highly committed.

Speaker #1: Thank you very much. Our next question comes from Kevin Chang with CIBC Gundy. You may now.

Speaker #3: I'll now pass the call over to Luke to walk through the quarter and guidance in a more depth and then share some closing comments before we open it up for Q&A.

Speaker #1: proceed. Thanks for taking my

Speaker #4: Question. I apologize if I missed this. Luke, you mentioned you kind of saw a sequential improvement in pricing as you kind of got through 2025 here.

Speaker #5: Thanks, Patrick. Q4 revenues grew 7.3% on account of better-than-expected contributions from pricing, volume, and M&A, which more than offset greater-than-anticipated headwinds from FX. Pricing was 6.4% for the quarter and 6.1% for the year, 70 bips better than our original plan.

Speaker #2: As for the base business guidance, Luke will walk us through the details, but it's exactly as we previously indicated. Recall that in 2024 and in 2025, we laid out an extremely detailed plan, raised the guide multiple times throughout the year, and beat our expectations on all financial metrics.

Speaker #4: Just wondering how we should think about the cadence of pricing in '26 as you kind of average out to the mid-fives. That's in your guidance there.

Speaker #3: Yeah, hey Kevin, great question. With the sequential increase that you had coming to the back half of '25, you end up with a stronger start in absolute numbers in Q1 that then sort of tapers down.

Speaker #5: Largely on account of EPR transitional benefits and realization of the incremental pricing opportunities we articulated at investor day. The sequential quarterly acceleration of price throughout 2025 sets us up with a very high visibility into 2026 pricing.

Speaker #2: We see multiple avenues of upside to our current 2026 guide, and that gives us confidence in our ability to meet and potentially exceed the expectations for the year.

Speaker #3: So where we're sitting at is that Q1 is a sort of mid-six or better number. And then that rate really kind of steps down to a kind of five-type number by the end of the year.

Speaker #2: Lastly, in 2025, we also progressed on our previously stated intention to maximize index inclusion opportunities. Last month, we announced the relocation of our executive headquarters to the U.S.

Speaker #5: Q4 volumes were 70 basis points ahead of plan, largely on account of unanticipated special waste activity in several of our markets. Lapping hurricane volume, the initial ramp of EPR, and the commencement of a larger municipal contract in the prior year were the primary drivers of the negative volume print for the quarter.

Speaker #3: So, one of the benefits that we have in a year of accelerated pricing realized the year before is the degree of visibility you have into that pricing cadence.

Speaker #2: The relocation broadened our eligibility for participation in U.S. equity indices while preserving our eligibility for inclusion in Canadian indices. We expect this strategy will help increase GFL's visibility with investors and ultimately drive a wider shareholder base.

Speaker #3: I mean, where we sit today, we probably already have 80% of 2026's pricing effectively already in hand, just by virtue of how the sort of math plays out.

Speaker #5: C&D-related volume continued to be soft, but we remain well-positioned for a broader economic recovery in this end of our business when it happens. Adjusted EBITDA margins continues to expand, with Q4 margins reaching 30.2%, the highest Q4 margin in our history.

Speaker #2: I'll now pass the call over to Luke to walk through the quarter and guidance in more depth, and then share some closing comments before we open it up for questions.

Speaker #3: So feeling really good on the price number could be a source of upside as we go. But it really will be starting high in Q1 and then tapering down by

Speaker #2: Q&A.

Speaker #1: Patrick. Q4 revenues grew 7.3% on account of better-than-expected contributions from pricing, volume, and M&A, which more than offset greater-than-anticipated headwinds from FX. Pricing was 6.4% for the quarter and 6.1% for the year, 70 bips better than our original plan.

Speaker #5: Adjusted EBITDA margins were up 175 basis points in our Canadian segment and behind 10 basis points in the US. Although US margins were materially up when excluding the impact of prior year hurricane volumes and acquisitions and commodity prices.

Speaker #3: Q4. That's

Speaker #4: Helpful. Maybe just turning to some of your, I guess, minority investments—GIP and Environmental Services. Just wondering how those performed in '25 and what was still kind of a soft—I'll call it industrial economy. Did those businesses exhibit the type of resiliency you saw within your solid waste business?

Speaker #5: Commodities continued to be a drag on margins, with market pricing decelerating another 10% from Q3. Excluding the impact of commodities and these other non-reflective items, Q4 underlying consolidated margins were up over 150 basis points from the prior year.

Speaker #1: Largely on account of EPR transitional benefits and realization of the incremental pricing opportunities we articulated at investor day. The sequential quarterly acceleration of price throughout 2025 sets us up with a very high visibility into 2026 pricing.

Speaker #4: Did it kind of end out the year the way you anticipated 12 months ago? Just any color you can provide there would be helpful.

Speaker #4: And thank

Speaker #4: you. Yeah, I think if you look

Speaker #5: The outperformance in Q4 resulted in full-year adjusted EBITDA of 1.985 billion. Note that using the same FX rate on which our original guidance was given, the full-year amount would have been approximately $2 billion, over $50 million better than the high end of our original guide despite the commodity and C&D volume headwinds.

Speaker #3: at—if you look at the ES business, I mean, your forecasting sort of 5 and 125 million of EBITDA for '25 going into the year when there was a lot of optimism around a new president, etc.

Speaker #1: Q4 volumes were 70 basis points ahead of plan, largely on account of unanticipated special waste activity in several of our markets. Lapping hurricane volume, the initial ramp of EPR, and the commencement of a larger municipal contract in the prior year were the primary drivers of the negative volume print for the quarter.

Speaker #3: I think with the softness in the industrial economy, etc., that business largely just finished just north of $500-ish. So, I mean, it was modestly off from our plan.

Speaker #5: Adjusted free cash flow was $425 million for Q4 and $756 million for 2025, ahead of plan on account of the EBITDA outperformance as the other inputs were largely in line with expectations.

Speaker #1: C&D-related volume continued to be soft, but we remain well-positioned for a broader economic recovery in this end of our business when it happens. Adjusted EBITDA margins continue to expand.

Speaker #3: But not materially off from the plan. And we had pretty robust plans for that business from a sort of a growth perspective. And on the GIP side, again, it's an industrial business, yes, but by and large, 75 to 80 percent of that work is government contracts.

Speaker #5: Adjusted free cash flow conversion improved to 38%, inclusive of the impacts of headwinds from M&A and FX. During the fourth quarter, we completed the incremental M&A that we had previewed in Q3, setting us up for meaningful revenue rollover into 2026, consistent with the initial framework we provided.

Speaker #1: With Q4 margins reaching 30.2%, the highest Q4 margin in our history. Adjusted EBITDA margins were up 175 basis points in our Canadian segment and behind 10 basis points in the US.

Speaker #1: Although US margins were materially up when excluding the impact of prior year hurricane volumes and acquisitions and commodity prices. Commodities continued to be a drag on margins, with market pricing decelerating another 10% from Q3.

Speaker #3: And largely based around the transportation sector. So that hasn't gone away. So that business basically performed to plan. So exiting, coming into this year, somewhere in the $300 million-ish range of EBITDA, like we had discussed.

Speaker #5: We also bought back over $200 million of our own shares during the quarter, bringing annual share repurchases total to $3 billion. Inclusive of the approximately $4 billion we deployed into M&A and share repurchases, we ended the year with net leverage of 3.4 times, as Patrick said, the lowest year-end net leverage in our history.

Speaker #1: Excluding the impact of commodities and these other non-reflective items, Q4 underlying consolidated margins were up over 150 basis points from the prior year. The outperformance in Q4 resulted in full-year adjusted EBITDA of $1.985 billion.

Speaker #3: And that's sort of still well in hand. But if you factor that in, even those two businesses at cost, right, there's from our perspective, at cost, there's 5 to 6 dollars a share of value there.

Speaker #5: Excluding the $750 million of incremental share buybacks, year-end net leverage would have been 3.1 times. The strong finish to 2025, combined with our positive forward outlook, allows for 2026 guidance better than the initial framework we provided in Q3.

Speaker #3: Why we think about opportunistic share buybacks is because our numbers on 2026 puts GFL trading at sort of like in the 12 and a half times range on 2026 numbers.

Speaker #1: Note that, using the same FX rate on which our original guidance was given, the full-year amount would have been approximately $2 billion—over $15 million better than the high end of our original guide, despite the commodity and C&D volume headwinds.

Speaker #3: When you factor in the equity value that sits in those two businesses, that aren't included in our numbers. And I think that's why we continue to think share buybacks are very attractive at these levels.

Speaker #1: Adjusted free cash flow was $425 million for Q4 and $756 million for 2025, ahead of plan on account of the EBITDA outperformance as the other inputs were largely in line with expectations.

Speaker #5: To level set on the guide, when we previously provided our 2026 framework, we did so assuming an FX rate of 1.40, which was the FX rate at the time and coincidentally the average rate for all of 2025.

Speaker #4: That's very helpful color. Thank you very much.

Speaker #3: Thanks,

Speaker #3: Kevin.

Speaker #1: Adjusted free cash flow conversion improved to 38%, inclusive of the impacts of headwinds from M&A and FX. During the fourth quarter, we completed the incremental M&A that we had previewed in Q3, setting us up for meaningful revenue rollover into 2026, consistent with the initial framework we provided.

Speaker #5: Consistent with our past practice, we are providing our actual 2026 guidance using the current FX rate of 1.36. Any changes to the FX rate will cause translational impacts to our reported results.

Speaker #1: Thank

Speaker #1: you. Our next question comes from Brian Boogermere with Citi. You may now

Speaker #1: proceed. Hi, good

Speaker #4: evening. Thanks for taking the question. Sorry if I missed this in the prepared remarks. Did GFL provide 1Q guidance? I think it did on the 4Q call last year.

Speaker #5: Recall that every one-point change in FX impacts revenue by approximately 35 million and adjusted EBITDA by approximately $11 million. 2026 revenue is expected to be approximately $7 billion or $7.14 billion on a constant currency basis, an 8% increase over 2025.

Speaker #1: We also bought back over $200 million of our own shares during the quarter, bringing annual share repurchases total to $3 billion. Inclusive of the approximately $4 billion we deployed into M&A and share repurchases, we ended the year with net leverage of 3.4 times, as Patrick said, the lowest year-end net leverage in our history.

Speaker #4: Maybe I missed it or maybe we blamed the cooperator or maybe your shifting strategy at that tiny bit. Thanks.

Speaker #3: Yeah, hey, Brian. It's Luke. Thanks for the question. I think we had some technical difficulties when we were giving the very end of the call.

Speaker #5: Pricing is expected to be in the mid-5s, driven by our base pricing programs and incremental contributions from EPR. The pricing plan includes modest progression in our ancillary surcharge programs and any implementation acceleration in this area will be a source of upside.

Speaker #3: And maybe that sort of cut out. But either way, I'll just reiterate what the prepared remarks was. And what I said was that looking specifically at Q1, we expect revenue of 1.6 to 1.625 billion at approximately 28.8% margin, which implies 150 basis points expansion over the prior year.

Speaker #1: Excluding the $750 million of incremental share buybacks, year-end net leverage would have been 3.1 times. The strong finish to 2025, combined with our positive forward outlook, allows for 2026 guidance better than the initial framework we provided in Q3.

Speaker #5: Q4 commodity prices were down 33% year-over-year and today's prices are approximately 20% less than the average price in 2025. Based on these current price levels, commodity and fuel prices are expected to create a 50 basis point headwind to revenue growth in 2026.

Speaker #3: Q1 adjusted free cash flow is expected to be negative $45 million, which is less than the prior year, but solely on account of the timing of working capital and CapEx.

Speaker #1: To level set on the guide, when we previously provided our 2026 framework, we did so assuming an FX rate of 1.40, which was the FX rate at the time and coincidentally the average rate for all of 2025.

Speaker #3: payments.

Speaker #4: Okay, okay. Thank you very much for—

Speaker #5: Any improvement to commodity prices throughout the year will be additive to our results. Volumes are expected to be positive 25 to 50 basis points.

Speaker #4: That. And then just one more question from me, just maybe as R&G production. I know these projects have been pushed out, but just as we are gradually—are you finding that your costs are sort of roughly in line with what your initial expectations were from the investor day last year for ongoing production costs, startup costs, just any kind of broader comments there?

Speaker #1: past practice, we are providing our actual Consistent with our 2026 guidance using the current FX rate of 1.36. Any changes to the FX rate will cause translational impacts to our reported results.

Speaker #5: There are a couple more sizable impacts included in this number, namely around hurricane volumes in Q1, EPR transition, and tangential residential contracts, excluding these headwinds underlying volumes are expected to grow closer to 100 basis points.

Speaker #1: Recall that every one-point change in FX impacts revenue by approximately $35 million, and adjusted EBITDA by approximately $11 million. 2026 revenue is expected to be approximately $7 billion or 7.14 billion on a constant currency basis, an 8% increase over 2025.

Speaker #5: M&A is expected to add $250 basis points of revenue growth, and using an FX rate of 1.36 creates a 210 basis point headwind. Adjusted EBITDA in 2026 is expected to be 2.14 billion or 2.185 billion on a constant currency basis, an increase of 10%.

Speaker #4: Thanks. I'll turn it

Speaker #4: over. Yeah,

Speaker #3: No material change in the actual costs. I think, obviously, we're taking a very careful look at, and building out, the largest sites before we're building out some of the smaller ones.

Speaker #1: Pricing is expected to be in the mid-5s, driven by our base pricing programs and incremental contributions from EPR. The pricing plan includes modest progression in our ancillary surcharge programs and any implementation acceleration in this area will be a source of upside.

Speaker #3: So I think what we've articulated in the investor day presentation, we said sort of that 175 million of R&G coming on. Our perspective is just depending on where some of these regulations and volume requirements come in that we're going to sort of think about that number sort of being potentially sort of in the 125 to 150 range.

Speaker #5: Adjusted EBITDA margins are expected to expand by an industry-leading 60 basis points, overcoming the headwinds from lower commodity prices and FX rates. The implied 30.6% margin for 2026 reflects an over 500 basis point expansion of margins over the four-year period since 2022.

Speaker #1: Q4 commodity prices were down 33% year-over-year and today's prices are approximately 20% less than the average price in 2025. Based on these current price levels, commodity and fuel prices are expected to create a 50 basis point headwind to revenue growth in 2026.

Speaker #3: That being said, EPRs are outperforming. So those two numbers as a whole are going to be on plan to our Investor Day presentation.

Speaker #5: Adjusted free cash flow increases to $835 million, or $860 million on a constant currency basis, an increase of 14%. For 2026 guide includes cash taxes, more than what was previously expected, as the benefit of ITCs associated with R&G projects have shifted into 2027.

Speaker #1: Any improvement to commodity prices throughout the year will be additive to our results. Volumes are expected to be positive 25 to 50 basis points.

Speaker #5: And Brian, just to add to what Patrick said, I think the operating costs once the plants are up and running are proving to be very much in line with the pro formas, which included an appropriate degree of conservatism to account for that.

Speaker #1: There are a couple more sizable impacts included in this number, namely around hurricane volumes in Q1, EPR transition, and tangential residential contracts, excluding these headwinds, underlying volumes are expected to grow closer to 100 basis points.

Speaker #5: If not for this change, adjusted free cash flow growth would have been closer to 20% on a constant currency basis. Included in the adjusted free cash flow guide is net CAPEX of approximately $800 million, cash interest of $395 million, and other items of $110 million.

Speaker #5: What we have noticed, though, is some of the startup has slipped a little bit to the right. So your ramp to achieve that sort of full run-rate profitability has arguably been a quarter or so longer than anticipated.

Speaker #5: But all the projects that we have up and running are performing, in fact, at or above what those sort of underwritten, sort of cost profiles were.

Speaker #1: M&A is expected to add $250 basis points of revenue growth, and using an FX rate of 1.36 creates a 210 basis point headwind. Adjusted EBITDA in 2026 is expected to be 2.14 billion or 2.185 billion on a constant currency basis, an increase of 10%.

Speaker #5: Excluded from adjusted free cash flow is approximately $175 million of incremental growth of CAPEX, approximately 50% of the amount deployed in 2025, consistent with previous expectations.

Speaker #5: So I think it's more of the sort of timing issue of shifting to the right. And then Patrick said, just ensuring that the overall envelope that we originally identified remains the appropriate level.

Speaker #5: But net-net, we had presented EPR and R&G as a combined step in that bridge. And we think that combined step remains intact; it just may be a reallocation between the two components therein.

Speaker #5: Adjusted free cash flow conversion as a percentage of adjusted EBITDA increases one moment, ladies and gentlemen. One moment, ladies and gentlemen. If I try to get our speaker reconnected.

Speaker #1: Adjusted EBITDA margins are expected to expand by an industry-leading 60 basis points, overcoming the headwinds from lower commodity prices and FX rates. The implied 30.6% margin for 2026 reflects an over 500 basis point expansion of margins over the four-year period since 2022.

Speaker #1: Thank you. Our next question comes from Trevor Romeo with William Blair. You may now proceed.

Speaker #1: Adjusted free cash flow increases to $835 million, or $860 million on a constant currency basis, an increase of 14%. For 2026, guide includes cash taxes, more than what was previously expected, as the benefit of ITCs associated with R&D projects have shifted into 2027.

Speaker #6: Good evening. Thanks for taking our questions. The first one I had was kind of a follow-up on EPR. I guess in terms of some of the provinces that maybe aren't as far along on EPR, how much at this point is still in that kind of future opportunity bucket?

Speaker #6: I guess, are you still seeing incremental contract awards as a potential upside driver for this year and beyond? And maybe you could talk about competition for any new contracts that are still out there if it's gotten tougher to win any of those deals.

Speaker #1: If not for this change, adjusted free cash flow growth would have been closer to 20% on a constant currency basis. Included in the adjusted free cash flow guide is net CAPEX of approximately $800 million, cash interest of $395 million, and other items of $110 million.

Speaker #3: Yeah, I mean, I would think we're largely through. I think there are some collection contracts still to be let over the next couple of years, but we would put that in the 'normal course' bucket with normal resi wins.

Speaker #1: Excluded from adjusted free cash flow is approximately $175 million of incremental growth CapEx, approximately 50% of the amount deployed in 2025, consistent with previous expectations.

Speaker #1: Adjusted free cash flow conversion as a percentage of adjusted EBITDA increases One moment, ladies and gentlemen. One moment, ladies and gentlemen. If I try to get our speaker In low 3s to mid 3s.

Speaker #3: But anything material is we are largely through that now. Alberta was the last province to basically get finalized and we ended up splitting the processing for the province of Alberta with waste management.

Speaker #3: So waste management ourselves have sort of half of the province each. And that was really the last one that will be let in Canada.

Speaker #3: So from an opportunity perspective, I think by the end of 2027, you'll have all EPR dollars flowing through the P&L.

Speaker #6: Okay, thanks, Patrick. That's helpful. And then maybe just on your M&A pipeline and, kind of, I guess, the pipeline plus what you bought maybe within the last quarter or so—if you could just provide maybe some color on a regional or asset perspective, kind of where you saw attractive opportunities, what you'd see in the near term in terms of your pipeline there.

Speaker #3: Yeah, I mean, I think we said the entity for the people were questioning whether or not we would actually deploy, if we'd actually deploy the amount of capital that we had in our sort of initial guidance that we'd been articulating through the year, just given the slow start to the year and the fact that we were focused on the divestiture and recapitalization of ES and GIP.

Speaker #3: We basically deployed close to a billion that we said we would. I think when you look at 2026, as we said on Q4, the pipeline is very healthy.

Speaker #3: A lot of good opportunities. Obviously, still in diligence on a bunch, but again, focus on businesses in markets where we already have existing infrastructure, creating very good synergy opportunities, which will sort of yield higher returns on invested capital versus moving outside and acquiring businesses outside of the existing platform.

Speaker #3: We're obviously extremely happy with the post-collection network we have throughout the 10 provinces in Canada and 25 states in the US. So we're going to continue just driving incremental opportunities on the backs of those facilities.

Speaker #3: And that's where we're going to be focused on for '26. But again, it's going to be, as we communicated, in the $750 million to $1 billion range. As we said in Q4, we think this year could be even higher than that.

Speaker #3: And assuming we continue to make our progress through diligence on some of these assets, I think we'll have a pretty good update for everybody when we report

Speaker #3: Q1. All right.

Speaker #6: Thank you very

Speaker #3: Thank you.

Speaker #1: Thank you. Our next question comes from Konar Gupta with Scotiabank. You may now

Speaker #1: proceed. Thanks, Sam.

Speaker #7: Just on the M&A follow-up, in terms of the asset quality that you're finding these days in the marketplace—I mean, a big chunk of the market has already been consolidated, right?

Speaker #7: And I mean, obviously, there's still a ton of opportunities for you guys, especially given your smaller than the rest of the three. But any noticeable differences you're seeing in terms of quality of assets that are coming open to

Speaker #7: you? No.

Speaker #3: I mean, I think it's obviously year by year. You can never predict when a specific asset is going to come to market. But what we know for certain is that the sellers of these businesses aren't getting any younger.

Speaker #3: And as people start thinking about succession and liquidity, that's creating opportunity. And I mean, if you think about the Canadian market, again, with basically Waste Management, Waste Connections, and ourselves representing, call it, 40-ish percent of the market, so 60% of the market continues to be white space and not consolidated.

Speaker #3: And you think about the US, about 50% of the market is consolidated by the majors. And that still creates a very good opportunity for all of us to continue acquiring businesses in the markets where we see opportunities for each of our respective businesses.

Speaker #3: But the quality of the assets continues to be very high. The quality of the assets that we're looking at within the existing pipeline is very good.

Speaker #3: And again, we think there'll be great contributors to sort of overall book. And we'll yield very good return on invested capital on the backs of our existing infrastructure.

Speaker #3: So we're feeling very good about where we sit today. And we're feeling very good about 2026 and beyond in that

Speaker #3: So we're feeling very good about where we sit today. And we're feeling very good about 2026 and beyond in that respect. And Konar, just to

Speaker #6: To add to Patrick's commentary, you have to remember—I mean, the focus for us is on tuck-in acquisitions into our existing platform. We can have a scenario where we have a great market and a great asset base, and there's a competitor that doesn't necessarily have a gold star asset.

Speaker #6: But in our hands, with cost takeout opportunities and other synergies, you can turn that into a very high-quality asset. So, what's nice about where we're at in our journey is the ability to densify and tuck in some of our best-in-class markets, and thereby take what is perhaps a suboptimal, little sort of tuck-in on its own, but turn that into something accretive in our hands.

Speaker #6: And that's really what we're focusing on. What can this business or asset contribute in our hands?

Speaker #7: Yeah, no, thanks for the color on that. And if I can follow up, I think there's some news around the Toronto recycling contract changes that have happened.

Speaker #7: I think there's a change of supplier or your third-party partner there. Any sense in terms of what potential changes might be required on your side to deliver on the contract in

Operator: Low threes to mid-threes.

Luke Pelosi: Low threes to mid-threes.

Speaker #7: Toronto? It's not available.

Speaker #1: Please try again later.

[Analyst]: Okay, perfect. Yep, exactly what I was looking for. Okay, and then Luke, if I just try to do the EBITDA bridge, I, I feel like there are a few kind of key things to think about. So one, it seems like you have something like $30 million of M&A rollover benefit. Again, this is on EBITDA. Two, on my math, at least, you maybe have $40 million of EPR and RNG. Three, you have about a $45 million drag from FX, but if I took all of those, it feels like organic EBITDA is up maybe low to mid single digits. And I realize that commodities and a few things are in there, but is that conceptually close? 'Cause it feels, feels doable.

Speaker #3: Sorry, but we're just going to move through. Hi. Sorry, in terms of, yeah, in terms of EPR—yeah, I mean, we obviously are doing the exact same work we did before, albeit with different service providers.

Operator: Good evening, everyone, and thank you for attending today's GFL Q4 2025 Earnings Call. My name is Jasmine, and I will be your moderator today. All lines will be muted during the presentation portion of the call, with the opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. At this time, I would now like to turn the call over to Patrick Dovigi, Founder and CEO of GFL. You may now proceed.

Speaker #3: Meaning our customer used to be the City of Toronto, and now our customer is Circular Materials. That being said, there's been no real change.

Speaker #3: Yes, there's a little bit of political fraud in the city of Toronto. The fact that we ended up taking on two more districts than we had before.

Luke Pelosi: Yeah, Tyler, it's a great way of breaking it down, and thank you for doing my role for me. I think you're directionally right, but you seem to be taking just the good guys and not factoring in the bad guys.

Patrick Dovigi: Thank you and good afternoon. I would like to welcome everyone to today's call and thank you for joining us. This afternoon, we will be reviewing our results for the fourth quarter and providing our guidance for 2026. I am joined this afternoon by Luke Pelosi, our CFO, who will take us through our forward-looking disclaimer before we get into the details.

Speaker #3: And there was a loss of some union jobs. I think that led to some media attention by a couple of, I would say, the more left-leaning papers.

[Analyst]: Okay.

Luke Pelosi: Right? So a couple things. Commodity is going against you, right? And so that is a pure sort of EBITDA hit that you will sort of have. In that margin bridge we have, recall Q1 2025, we enjoyed storm volumes in the southeast associated with the hurricane. Very high margin contribution that you're not getting the benefit of that, so that's sort of distorting that bridge a little bit. And then on the EPR, while $40 million, you know, I think, was the right way of thinking about it at the beginning of 2025, with the outperformance that 2025 had, I think that number comes in a little inside on the 2026 year-over-year comp. So if you normalize those, then I think you should get to a base business underlying organic EBITDA at the sort of mid to high single digits.

Speaker #3: That being said, we started collection in Ontario for over a million homes, and collection success was better than 99.3% in the first month of a very large startup.

Luke Pelosi: Thank you, Patrick. Good afternoon, everyone. Thank you for joining. We have filed our earnings press release, which includes important information. The press release is available on our website. During this call, we'll be making some forward-looking statements within the meaning of applicable Canadian and US securities laws, including statements regarding events or developments that we believe or anticipate may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set out in our filings with the Canadian and US securities regulators. Any forward-looking statement is not a guarantee of future performance, and actual results may differ materially from those expressed or implied in the forward-looking statements. These forward-looking statements speak only as of today's date, and we do not assume any obligation to update these statements, whether as a result of new information, future events and developments, or otherwise.

Speaker #3: So, overall, very successful. The province continues to be very happy. Ultimately, there's a change in collection days in some of the City of Toronto, which certain residents didn't like or enjoy.

Speaker #3: But I think we're largely through that, and now into our second month, and I think the noise is largely—

Speaker #3: Subsided. Yeah, appreciate the thanks. Thank you.

Speaker #6: Thanks.

Luke Pelosi: As you said, you know, we're feeling confident that that's something that can be achieved.

Speaker #1: Thank you. Our next question comes from William Griffin with Barclays.

[Analyst]: Okay, perfect. Thank you, guys.

Speaker #1: Outperceed. Great.

Operator: Thanks, Tyler. Thank you. Our next question comes from Sabahat Khan with RBC. You may now proceed.

Luke Pelosi: This call will include a discussion of certain non-IFRS measures. A reconciliation of these non-IFRS measures can be found in our filings with the Canadian and US securities regulators. I'll now turn the call back over to Patrick.

Speaker #6: Good evening. Thanks very much for the time. Most of my questions have already been answered, but I just wanted to come back to the update you gave around the GIP and ES.

Speaker #6: I appreciate the color there on the performance. I guess, do you have any updated thoughts on maybe providing some incremental disclosure around those businesses going forward in quarterly releases, just to kind of help investors and analysts track the performance of those businesses?

Sabahat Khan: Okay, great. Thanks, and good afternoon. Just following up on the commentary around EPR. Can you just maybe give us a little bit more color on the incremental growth CapEx investments that you're sort of calling out here? How does that sort of flow in through the course of the year? In terms of the RNG side and the EPR side, it sounds like the contribution is still there, but just maybe how does that ramp for 2026 and maybe into 2027? Thanks.

Patrick Dovigi: Thank you, Luke. We started 2025 by presenting our strategy to drive best-in-class financial results, and this year's results demonstrate we are doing exactly what we said we would. Our relentless focus on value creation through the optimization of our existing platform is yielding results that are consistently ahead of expectations, and our future has never been brighter. In 2025, we reached a historical milestone of 30% Adjusted EBITDA margin for the first time in our company's history. This result is attributable to the tireless efforts of our 15,000 employees and ongoing contributions from implementing the operational priorities we highlighted at last year's Investor Day. Ongoing price discovery, along with the operational efficiencies within our portfolio, remain a core focus to drive appropriate returns for the high-quality services we provide.

Speaker #5: Yeah, well, it's Luke. It's a great question and something I know we've talked about in person. In light of the fact that both of those recapitalizations or carve-outs just happened, we all have this very fresh mark.

Luke Pelosi: Yeah. Hey, Sabahat, great question. Luke speaking here. The 175 is very front-end loaded. Just so you know, what's really coming on EPR this year is the collection side of the contracts, and the majority of that is actually for the payment of said trucks. So I think we're expecting sort of about $100 to $120 of that in Q1, and then sort of trickles in through the balance of the year. As we had alluded, RNG incremental contribution this year is more muted, as projects have shifted to 2027. So the RNG contribution in the current plan is pretty flat in terms of dollars with 2025. You have slightly higher levels of production at a slightly lower RIN price.

Speaker #5: So the cost basis, as Patrick referenced, roughly close to $3 billion across the two assets today, is pretty sort of fresh. So we didn't include something at this.

Speaker #5: But absolutely, as we go forward, we're going to come up with the appropriate level of disclosure such that you guys can have a handle on how those businesses are doing, what the sort of debt level of them are, and what our sort of equity interest is, so you'll have an ability to calculate that $6 per share math that Patrick was doing.

Patrick Dovigi: In 2025, we meaningfully outperformed our initial price expectations, furthering our realization of the incremental pricing opportunities we identified at Investor Day. The pricing environment remains constructive, and we are confident in our ability to continue to price at an appropriate spread above our internal cost of inflation. Q4 volumes were ahead of plan, and we ended the year with 50 basis points of positive volume, a remarkable achievement considering the macro environment we're in. We see this differentiated outcome as yet another testament to the quality of our portfolio, underpinned by our overall market selection and the execution of our returns-focused capital deployment strategy. Consistent with Q3, both operational and SG&A cost intensity continued to trend lower in the quarter and for the full year.

Speaker #5: So we will do that. But as of today, we're just thinking, 'Hey, you had a $1.7 billion cost base in ES, roughly a billion dollars in the GIP asset.' And then, I think we valued the option on ES at a couple hundred million bucks.

Luke Pelosi: And then the expectation is it's sort of into 2027 and 2028 when you get the ramp of, you know, the tail of the RNG projects coming online. Growth spend in 2027, the equivalent of that number, I think, you know, steps down significantly again from where we are today, as EPR will largely be completed, and, you know, the RNG tail is relatively small. So we'll advise on 2027, you know, as we get closer to it, but, you know, the expectation today is it's again a meaningful step down from this year.

Speaker #5: So just under $3 billion of value at cost across those two businesses.

Speaker #5: today. All

Speaker #6: right. That's all for me. Thanks very

Speaker #6: much. Thank you.

Speaker #1: Our next question comes from Jerry Rivage with Wells Fargo Human

Speaker #1: Outperceed. Yes, hi.

Speaker #3: Yeah, good evening, everyone. Luke, I want to ask you, as we think about the hi. Patrick, Luke. I wanted to to ask you, as we think about the free cash flow profile of the business, so now that you've got a cleaner portfolio, how should we be thinking about CapEx to sales beyond '26?

Patrick Dovigi: The levers we outlined at Investor Day continued to contribute to this performance, including enhanced operational efficiency, improving labor turnover, fleet optimization, and procurement benefits as a result of our greater scale. The combined impacts of these initiatives are apparent in the 30% Adjusted EBITDA margin we achieved for the year, an industry-leading 130 basis point increase over 2024. To achieve such a result in the face of an ongoing macro headwind reinforces our conviction in our stated goal of achieving low to mid-30s margins by 2028. 2025 was also a transformative year in terms of our capital allocation strategy. The benefits, which include the sale of our ES segment, simplified our business into a pure-play, solid waste leader.

Sabahat Khan: Okay, great. And then just on the volume portion, it looks like you're guiding to modestly positive volumes. Can you maybe just break that out a little bit across some of the puts and takes, any shedding left in that? And in addition, sort of what are you seeing across some of the more cyclical end markets? Is the situation maybe somewhat better than 2025? You can just kind of break out the volume piece a little bit. Thanks.

Speaker #3: So the core business looks like there's about 11.5% CapEx to sales, and you have the high returns growth CapEx on top of it. As a starting point for '27 and beyond, how would you counsel us to think about both growth CapEx opportunities, as well as just normalized CapEx to sales, versus what we've got in—

Luke Pelosi: Yeah, I think we're giving the guide, Sabahat, based on today's macro conditions, which, you know, is... continues to be soft on the sort of C&D or industrial end. Now, I think there are some green shoots out there that may suggest, you know, there's opportunity above that. Certainly, the benefit of that opportunity would be additive to the guide. If you think about the year for 2025, Q1 started a little bit sort of stronger before some of the uncertainty entered the macro environment. And therefore, I think Q1 is a tougher comp, so we're expecting a negative volume number in Q1. And then that moderates as you start lapping the sort of tougher quarters that were sort of experienced in the back half of this year.

Speaker #3: '26? Yeah, thanks,

Speaker #5: Jerry. It's a great question. And I know one that's the industry is a wide sort of focuses on. I think today, normal course CapEx if I was underwriting the model, it's an 11 to 11.5% number, right?

Speaker #5: I think probably 11.5 today as we sort of just get through some tariffs, etc., and maybe that gravitates back down to that normal sort of 11% spend.

Patrick Dovigi: The evaluations achieved in both the ES transaction and recapitalization of GIP demonstrated the immense equity value we have created in both of these assets. Our retained investment in these businesses allows GFL to continue to participate in meaningful value creation. The proceeds received from the divestitures and recapitalization allowed us to materially delever our balance sheet and buy back over 10% of our own stock. We deployed nearly $1 billion into accretive M&A, largely in the back half of the year, providing an incremental tailwind as we head into 2026. Regarding the share buybacks, recall that we originally intended to deploy $2.25 billion of the ES proceeds into share repurchases, a level of investment that we completed early in the first half of the year.

Speaker #5: I would characterize that as the normal course, which is inclusive of maintenance and normal course growth. Obviously, in years where we're going to be delivering outsized growth, whether it's EPR or similar type of investments, there could be opportunity for spend above and beyond that.

Luke Pelosi: We do have the benefit of EPR coming in and contributing, and that is a part of it. And then also, as Patrick alluded to, you know, we still take a lot of pride in our market selection. And what I mean by that is a concentration of our revenues in the faster-growing south and southeast markets, where notwithstanding a perhaps more uncertain macro, you still do have volumetric growth by virtue of, you know, people moving and new business formation. So we're feeling good with the setup.

Speaker #5: And we'll call that out as we have. Where we sit today, as I articulated to the other question, I think next year's growth spend is currently contemplated to step meaningfully down from this year’s, as really EPR is behind us and you just have the sort of tail end of building out the sort of R&D facilities.

Speaker #5: So the truth is, as we've said since our 2023 capital allocation framework, we've looked at growth CapEx similar to M&A. And if we could find more opportunities like R&D and EPR, we would be very inclined to invest in those based on the sort of returns profile.

Luke Pelosi: You know, I think there's multiple avenues of upside above what we have in here, but we're, you know, very pleased to be able to sort of report a year of positive volume, where I think the industry as a whole is probably slightly negative, and to be able to reiterate that sort of positive outlook going into 2026 as well.

Speaker #5: Where we sit today, we don't see anything else on block that is going to warrant that same carve-out as we've done for EPR and R&D.

Patrick Dovigi: Due to the share price dislocation in the second half of the year, we saw additional share repurchases as a highly prudent use of capital to create shareholder value over the long term. As a result, we deployed an additional $750 million into incremental buybacks. Inclusive of both the $1 billion of M&A spend and the incremental share repurchases, we exited 2025 with the lowest year-end net leverage in our history. With the benefits of the implementation of the capital allocation strategy in place, we enter 2026 with ultimate balance sheet flexibility. This setup, together with natural deleveraging from organic growth, will allow us to execute on our robust M&A pipeline while maintaining leverage in the low to mid-threes, as a range to which we remain highly committed.

Speaker #5: So we'd expect these just to play off and then roll off. And we'll just be back to a singular CapEx number. But certainly, should by regulation or otherwise, we see opportunities as attractive as these, we're going to go after those and we'll talk about the appropriate stratification or bifurcation of our CapEx at that time.

Sabahat Khan: Just, maybe just a quick one, if I can sneak it in there. Just on the capital allocation side, obviously a very big year on buybacks in 2025. Sounds like the M&A pipeline is reasonably good. How do you guys sort of balance the two in terms of what seems more attractive on, you know, on your analysis or how you view it? Thanks.

Speaker #3: Super. And separately, Patrick, can I ask you, given the strong M&A activity over the course of '25, normally we see you folks deliver really good synergies in year two of integration.

Patrick Dovigi: ... Yeah, I mean, obviously with, you know, the sell-off in the sector and sort of where we are, we, you know, we continue to believe the stock is materially undervalued. That being said, we need to balance that, you know, that, that could correct itself very quickly, and our expectation is, is that it will in time. So we also have to plan for the future in some of these, you know, opportunities that are in front of us. You know, and as we continue to work through the opportunities, we'll sort of outweigh and weigh against one another about what we think the right thing to do is. But just know that, you know, my 30 million shares are working beside every one of yours, so I'm gonna do what's right for what I believe sort of the long-term value creation for the business will be.

Speaker #3: Can you talk about how some of the larger deals are performing, and whether we could see a notable tailwind in 2026 versus 2025 as you integrate those assets?

Patrick Dovigi: As for the base business guidance, Luke will walk us through the details, but it's exactly as we previously indicated. Recall that in 2024 and in 2025, we laid out an extremely detailed plan, raised the guide multiple times throughout the year, and beat our expectations on all financial metrics. We see multiple avenues of upside to our current 2026 guide, and that gives us confidence in our ability to meet and potentially exceed the expectations for the year. Lastly, in 2025, we also progressed on our previously stated intention to maximize index inclusion opportunities. Last month, we announced the relocation of our executive headquarters to the US. The relocation broadens our eligibility for participation in US equity indices while preserving our eligibility for inclusion in Canadian indices.

Speaker #7: Yeah, I mean, there was nothing overly large that sort of happened in '25. That being said, when we look, when we embarked on the M&A pipeline for '25, we did, just given that we were taking a year and shoving it into basically six months, we really focused on the ones that were most accretive, that were going to give us the biggest bang for our buck quickest.

Patrick Dovigi: But, you know, last year it was clearly obvious in the back half of the year that it was prudent to spend that incremental $750 million on share buybacks, just given where the stock was trading. But that being said, we have a great pipeline as well, with good opportunities in markets where we're already operating. And, you know, we'll continue looking at both and weighing them as the opportunities continue to present themselves.

Speaker #7: And I think that's what gives us a lot of conviction around some of the comments we made in our prepared remarks. I think if you look at the previous 20 quarters of the business, I think the previous 20 quarters, we really sort of met or exceeded expectations, and I think there's multiple levers and multiple avenues for us to continue to exceed expectations in 2026.

Bryan Burgmeier: Thanks very much.

Sabahat Khan: Thanks very much.

Patrick Dovigi: We expect this strategy will help increase GFL's visibility with investors and ultimately drive a wider shareholder base. I'll now pass the call over to Luke to walk through the quarter and guide us into more depth, and then share some closing comments before we open it up for Q&A.

Operator: Thank you. Our next question comes from Kevin Chiang with CIBC. Wu Gang, you may now proceed.

Speaker #7: And a big part of that is realizing synergies on some of these opportunities that we closed in late Q3 and early Q4. So you're right.

Kevin Chiang: Thanks for taking my question. I apologize if I missed this. So, Luke, you mentioned, you know, you kind of saw sequential improvement in pricing as you kind of got through 2025 here. Just wondering how we should think about the cadence of pricing in '2026 as you kind of average out to the mid-fives that's in your guidance there?

Luke Pelosi: Thanks, Patrick. Q4 revenues grew 7.3% on account of better-than-expected contributions from pricing, volume, and M&A, which more than offset the greater than anticipated headwinds from FX. Pricing was 6.4% for the quarter and 6.1% for the year, 70 basis points better than our original plan, largely on account of EPR transitional benefits and realization of the incremental pricing opportunities we articulated at Investor Day. The sequential quarterly acceleration of price throughout 2025 sets us up with a very high visibility into 2026 pricing. Q4 volumes were 70 basis points ahead of plan, largely on account of unanticipated special waste activity in several of our markets. Lapping hurricane volume, the initial ramp of EPR, and the commencement of a larger municipal contract in the prior year were the primary drivers of the negative volume print for the quarter.

Speaker #7: We will continue to deliver on those, and I think those are contributing to us exceeding expectations for 2026, coupled together with what we think is a very compelling pipeline for '26.

Speaker #7: And we looked at some great updates for you as we report Q1 and give some good updates for the balance of the year as we get through the beginning of the year.

Luke Pelosi: Yeah. Hey, Kevin, great question. You know, with the sequential increase that you had coming to the back half of 2025, you end up with a stronger start in absolute numbers in Q1, that then sort of tapers down. So where we're sitting is that Q1 is a sort of mid-six or better number, and then that ratably kind of steps down to a kind of, you know, five-type number by the end of the year. So, you know, one of the benefits that we have in a year of accelerated pricing realized the year before, is the degree of visibility you have into that pricing cadence. I mean, where we sit today, we probably already have 80% of 2026's pricing effectively already in hand, just by virtue of how the sort of math plays out.

Speaker #3: And sorry, Patrick, if I may, just to put a finer point on that. So, typically in year one, you work down by about a turn in terms of synergy relative to the acquisition multiples of what we typically see.

Speaker #3: So, just applying that—given the outsized M&A in '25, it does feel like that's a big chunk of the core EBITDA growth that you have baked into the numbers, unless I'm missing something about the nature of these deals, which is normal.

Luke Pelosi: C&D-related volume continued to be soft, but we remain well-positioned for a broader economic recovery in this end of our business when it happens. Adjusted EBITDA margins continues to expand, with Q4 margins reaching 30.2%, the highest Q4 margin in our history. Adjusted EBITDA margins were up 175 basis points in our Canadian segment and behind 10 basis points in the US. Although US margins were materially up when excluding the impact of prior-year hurricane volumes, acquisitions, and commodity prices. Commodities continued to be a drag on margins, with market pricing decelerating another 10% from Q3. Excluding the impact of commodities and these other non-reflective items, Q4 underlying consolidated margins were up over 150 basis points from the prior year. The outperformance in Q4 resulted in full-year adjusted EBITDA of $1.985 billion.

Speaker #5: No, Jerry, it's Luke speaking. I think you're absolutely right. We've demonstrated the outsized margin expansion that we've delivered and enjoyed over the past three or four years.

Luke Pelosi: So, feeling really good on the price number, could be a source of upside as we go, but it really will be starting high in Q1 and then tapering down by Q4.

Speaker #5: A large part of that is being driven by that synergy capture, as you've articulated. So, if you think about the 2020 six guide, Tyler on the first question was trying to parse it out.

Kevin Chiang: That, that's helpful. Maybe just turning to some of your, I guess, minority investments, you know, GIP, GIP and Environmental Services. Just wondering how those performed in 2025, and what was still kind of a soft, I'll call it, industrial economy, just, you know, did those businesses exhibit the type of resiliency you saw within your solid waste business, you know, to kind of end out the year the way you anticipated 12 months ago? Just any color you can provide there would be helpful, and thank you.

Speaker #5: But even when you peel it all back, you're seeing margin expansion above and beyond what normal course price-cost spread should provide. And the component of that is exactly as you said, that you're realizing the synergy benefit of all that M&A we did in '25 and also still the tail end of what you did in 2024.

Speaker #5: So you're absolutely right. Typically, if you're going to pay—I think at Investor Day, we said we pay sort of eight times on the face of it.

Speaker #5: And then, over time, we can take that cost of ownership multiple down through synergy capture. That is happening—you saw that in '25, you saw that in '24.

Patrick Dovigi: Yeah, I think if you look at, if you look at the ES business, I mean, you're, you're forecasting sort of $525 million of EBITDA for, for 2025 going into the year, when there was a lot of optimism around, a new president, et cetera. I think with the softness in the industrial economy, et cetera, that business, you know, largely just finished just north of, you know, $500-ish. So little. I mean, it was modestly off from our plan, but not materially off from the plan. I mean, you know, we had pretty robust plans for that business from a sort of a growth perspective.

Speaker #5: And certainly, for us to be able to have a '26 guide that shows 60 basis points of margin expansion—including, don't forget, a 25 basis point-plus headwind from commodities.

Luke Pelosi: Note that using the same FX rate on which our original guidance. The full year amount would have been approximately $2 billion, over $15 million better than the high end of our original guide, despite the commodity and C&D volume headwinds. Adjusted Free Cash Flow was $425 million for Q4 and $756 million for 2025, ahead of plan on account of the EBITDA outperformance, as the other inputs were largely in line with expectations. Adjusted Free Cash Flow conversion improved to 38%, inclusive of the impacts of headwinds from M&A and FX. During the fourth quarter, we completed the incremental M&A that we had previewed in Q3, setting us up for meaningful revenue rollover into 2026, consistent with the initial framework we provided.

Speaker #5: A few other puts and takes, you're actually at an underlying of closer to 100 basis points of margin expansion in '26. Certainly contributing in there is the synergy capture from the acquisitions that you completed in '25 and previously.

Speaker #3: All right. Thank you, John.

Speaker #1: Thank you. Our next question comes from Toby Sommer with Truist. You may now.

Patrick Dovigi: And, you know, on the GIP side, again, it's an industrial business, yes, but, you know, by and large, you know, 75 to 80% of that work is, is government contracts and largely based around transportation sector. So, you know, that hasn't gone away, so that, that business basically performed to plan. So, you know, exiting, exiting, you know, coming into this year, you know, somewhere in the $300-ish million range of EBITDA, like we had discussed, and that's sort of still well in hand. But, you know, if you factor that in, even those two businesses at cost, right? You know, there's... From our perspective, you know, at cost, there's, you know, $5 to $6 a share of value there.

Speaker #1: proceed. Thank

Speaker #8: You. I was hoping you could elaborate a little bit more on some of the green shoots that you said you might be seeing, with respect to volume in '26, in both the core and perhaps even ES?

Speaker #8: Thanks.

Luke Pelosi: We also bought back over $200 million of our own shares during the quarter, bringing annual share repurchases total to $3 billion. Inclusive of the approximately $4 billion we deployed into M&A and share repurchases, we ended the year with net leverage of 3.4 times. As Patrick said, the lowest year-end net leverage in our history. Excluding the $750 million of incremental share buybacks, year-end net leverage would have been 3.1 times. The strong finish to 2025, combined with our positive forward outlook, allows for 2026 guidance better than the initial framework we provided in Q3. To level set on the guide, when we previously provided our 2026 framework, we did so assuming an FX rate of 1.40, which was the FX rate at the time, and coincidentally, the average rate for all of 2025.

Speaker #9: Yeah.

Speaker #9: So, Toby, it's Luke speaking. I was speaking in relation to GFL and sort of spoke to that. I think on the macro side—so maybe even the indices, whether it's PMI or PPI—are actually sort of starting to turn. I don't know if it's positive, or showing some sort of green shoots coming out of that.

Speaker #9: But it's also just in the sentiment and talking to some of our larger customers as to what their capital plans are for 2026. Very clearly, in '25, people shelved a lot of capital plans, whether it was they were waiting out to see how the world was going to unfold.

Patrick Dovigi: You know, why we think about opportunistic share buybacks, because, you know, our numbers on 2026 put the GFL trading at sort of like, you know, in the 12.5 times range on 2026 numbers, when you factor in the, the equity value that sits in those two businesses that aren't included in our numbers, and I think that's why we continue to think share buybacks are, you know, very attractive at these levels.

Speaker #9: I think just having conversations with some of our large customers today, it seems clear that people are figuring out a way to navigate in this period of uncertainty and are going to invest in some of that sort of capital spend that can end up being volume on our side.

Kevin Chiang: That's, that's very helpful, caller. Thank you very much.

Speaker #9: We also saw, on the special waste side—we alluded to this in the prepared remarks—in Q4, some surprise special waste coming out of activity in some of our markets that wasn't otherwise contemplated.

Patrick Dovigi: Thanks, Kevin.

Luke Pelosi: Consistent with our past practice, we are providing our actual 2026 guidance using the current FX rate of 1.36. Any changes to the FX rate will cause translational impacts to our reported results. Recall that every 1-point change in FX impacts revenue by approximately $35 million and Adjusted EBITDA by approximately $11 million. 2026 revenue is expected to be approximately $7 billion or $7.14 billion on a constant currency basis, an 8% increase over 2025. Pricing is expected to be in the mid-fives, driven by our base pricing programs and incremental contributions from EPR. The pricing plan includes modest progression in our ancillary surcharge programs, and any implementation acceleration in this area will be a source of upside.

Operator: Thank you. Our next question comes from Bryan Burgmeier with Citi. You may now proceed.

Speaker #9: As you know, that's often the leading indicator for activity that then follows on the back of that. So, while we would certainly like to see more green shoots before we get sort of too ahead of our skis, it's certainly positive to just see those indicative indicators suggesting that maybe there's some opportunity on the horizon.

Bryan Burgmeier: Hi, good evening. Thanks for taking the question. Sorry if I missed this in the prepared remarks. Did GFL provide Q1 guidance, like I think you did on the Q4 call last year? You know, maybe I missed it, or maybe we blame the call operator, or maybe you're shifting strategy a tiny bit. Thanks.

Luke Pelosi: Yeah. Hey, Bryan, it's Luke. Thanks for the question. I think we had some technical difficulties when we were giving the very end of the call, and maybe that sort of cut out. But either way, I'll just reiterate what the prepared remarks was. And what I said was that looking specifically at Q1, we expect revenue of $1.6 to $1.625 billion at approximately 28.8% margin, which implies 150 basis points expansion over the prior year. Q1 adjusted free cash flow is expected to be negative $45 million, which is less than the prior year, but solely on account of the timing of working capital and CapEx payments.

Speaker #8: Thank you, that's helpful. With respect to moving the headquarters to the U.S. and inclusion in various indexes, could you maybe give us a little bit of color on the timeline and any hurdles or decisions that you have to weigh in order to pursue various inclusions?

Luke Pelosi: Q4 commodity prices were down 33% year-over-year, and today's prices are approximately 20% less than the average price in 2025. Based on these current price levels, commodity and fuel prices are expected to create a 50 basis point headwind to revenue growth in 2026. Any improvement to commodity prices throughout the year will be additive to our results. Volumes are expected to be positive, 25 to 50 basis points. There are a couple more sizable impacts included in this number, namely around hurricane volumes in Q1, EPR transition, and tangential residential contracts. Excluding these headwinds, underlying volumes are expected to grow closer to 100 basis points. M&A is expected to add 250 basis points of revenue growth, and using an FX rate of 1.36 creates a 210 basis point headwind.

Speaker #9: Yeah. So right out of the gate, by virtue of the changes that have already occurred, we've become eligible for the Russell set of, sort of, indices.

Speaker #9: And the timeline is, typically how that works is mid-spring. I think in April they'll make an evaluation, and we believe that we'll check the boxes to be eligible for inclusion.

Bryan Burgmeier: ... Okay, okay. Thank you, thank you very much for that. And then just, just one more question for me. Just, just maybe as RNG production, I know, I know these projects have been pushed out, but just, as we are gradually kind of ramping up production, are, are you finding that your costs are sort of roughly in line with what your initial expectations were from the Investor Day last year, your ongoing production costs, you know, startup costs, just, any kind of broader comments there? Thanks. I'll turn it over.

Speaker #9: And the actual inclusionary date would happen in the middle of the year. I think it's in June. And if you look just on the face of it, I mean, the Russell index inclusion alone could yield somewhere in the mid-single digits of our float, right?

Speaker #9: So, an incremental permanent demand that's sort of going to come on. By virtue of the step that we've taken, the next step would become the eligibility for other US-based indices, CRSP being one that is available to us, and we think we're eligible.

Patrick Dovigi: Yeah, no material change in the actual costs. You know, I think obviously we're taking a very careful look at, in building out, you know, the larger sites before we're building out some of the smaller ones. So, you know, I think what we've articulated, you know, in the Investor Day presentation, we said it's about 175 million of RNG coming on. You know, our perspective is just depending on, you know, where some of these regulations and volume requirements come in, that we're gonna sort of think about that number sort of being potentially sort of in the 125 to 150 range. That being said, EPR is outperforming, so those two numbers as a whole are gonna be on plan to our Investor Day presentation.

Speaker #9: And then, obviously, the S&P—sort of 400/500. Further steps would be required, most notably US GAAP and no longer being a foreign private issuer.

Luke Pelosi: Adjusted EBITDA in 2026 is expected to be CAD 2.14 billion or 2.185 billion on a constant currency basis, an increase of 10%. Adjusted EBITDA margins are expected to expand by an industry-leading 60 basis points, overcoming the headwinds from lower commodity prices and FX rates. The implied 30.6% margin for 2026 reflects an over 500 basis point expansion of margins over the four-year period since 2022. Adjusted free cash flow increases to CAD 835 million or 860 million on a constant currency basis, an increase of 14%. The 2026 guide includes cash taxes more than what was previously expected, as the benefit of ITCs associated with the RNG projects have shifted into 2027.

Speaker #9: Steps are underway for us to be eligible both from a US GAAP conversion, as well as to be filing on the domestic forms. And in doing so, you could then open up that incremental index demand.

Speaker #9: And if you look at what the index specialists say, there's upwards of another sort of 10% to 15% of volume of our sort of float that could be in demand from that.

Speaker #9: If you just look overall at how much passive demand is in the GFL stock versus our peers, there's a meaningful gap. And I think this headquarters announcement is a first step in starting to close this.

Luke Pelosi: Brian, just to add to what Patrick said, you know, I think the operating costs, once the plants are up and running, are proving to be very much in line with the pro formas, which included an appropriate degree of conservatism to account for that. What we have noticed, though, is some of the startup, you know, has slipped a little bit to the right, so your ramp to achieve that sort of full run rate profitability has arguably been a quarter or so longer than anticipated. But all the projects that we have up and running are performing, in fact, you know, at or above what those sort of underwritten sort of cost profiles were. So I think it's more of the sort of timing issue shifting to the right. And then Patrick said, just ensuring that the overall envelope that we originally identified remains the appropriate level.

Speaker #9: So there’s a significant degree of incremental demand that we think, over the short and medium term, should come into the name. And we’re going to continue to actively pursue that.

Speaker #9: As Patrick alluded to in his opening remarks, one of the benefits of the current strategy—thanks to some of the sort of recent changes to the S&P definitions—is none of these changes preclude our eventual inclusion or eligibility, therefore, into the TSX 60, which, as many know, would drive even more incremental passive demand.

Luke Pelosi: If not for this change, Adjusted Free Cash Flow growth would have been closer to 20% on a constant currency basis. Included in the Adjusted Free Cash Flow guide is net CapEx of approximately $800 million, cash interest of $395 million, and other items of $110 million. Excluded from Adjusted Free Cash Flow is approximately $175 million of incremental growth CapEx, approximately 50% of the amount deployed in 2025, consistent with previous expectations. Adjusted Free Cash Flow conversion as a percentage of Adjusted EBITDA increased-

Speaker #9: So, we think we have very nice near-, medium-, and longer-term tailwinds that should drive a significant, incremental, permanent demand for a large component of

Speaker #9: So we think we have very nice near-, medium-, and longer-term tailwinds that should drive significant incremental, permanent demand for a large component of our float.

Luke Pelosi: But net-net, we had presented EPR and RNG as a combined step in that bridge, and we think that combined step remains intact, just maybe a reallocation between the two components therein.

Speaker #8: I appreciate the detail. Thanks, Luke.

Speaker #1: Thank you. Our next question comes from James Kong with TD Cowden. You may now proceed.

Speaker #10: Hey, guys. Thanks for taking my questions. So, Luke, just a clarification on the pricing. I think pricing was 6.4% in the fourth quarter.

Operator: Thank you. Our next question comes from Trevor Romeo with William Blair. You may now proceed.

Patrick Dovigi: One moment, ladies and gentlemen. One moment, ladies and gentlemen, as I try to get our speaker reconnected.

Speaker #10: I think you said Q1, you're mid-4s or in the 6s, so... And I think you said you're largely 80% contracted through the year as of Q1 or something like that.

Trevor Romeo: Good evening. Thanks for taking our questions. First one I had was kind of a follow-up on EPR. I guess, in terms of some of the provinces that maybe aren't as far along on EPR, how much at this point is still in that kind of future opportunity bucket? I guess, are you still seeing incremental contract awards as a potential upside driver for, you know, this year and beyond? And maybe you could talk about competition for any new contracts that are still out there, if it's gotten tougher to win any of those deals.

Speaker #10: So, help me understand. I mean, I know that pricing will bleed lower—just the math of it—throughout the year. But how do you get to mid-5s from 6.4 or solidly in the 6s?

Patrick Dovigi: Yeah, no, I would say we're largely through. You know, I think there are some collection contracts, you know, still to be let over the next couple of years, but that's, you know, we would put that in the normal course bucket with normal resi wins. But anything material is, you know, we are largely through that now. Alberta was the last province to basically get finalized and, you know, we ended up splitting the processing for the province of Alberta with Waste Management. So, Waste Management, ourselves, have sort of half of the province each. And that was, you know, really the last one that will be let in Canada. So from an opportunity perspective, I think by the end of 2027, you'll have all EPR dollars flowing through the P&L.

Speaker #9: Yeah, hey Jim, thanks for the question. It's a good one. I know sometimes the pricing math can get a little confusing, but it's really a function of the quarter over the prior year quarter.

Speaker #9: And during a period of ramping pricing during the year, you've effectively—the pricing actions I did in H2 '25, I now have certainty of those rolling over into H1 of '26.

Speaker #9: And it therefore just gives me a high degree of certainty of the actual dollars of price that will be realized in each of these quarters.

Speaker #9: So if you think about a Q1 number being in a sort of mid-6s, and if that then steps down—and forgive me, I don't have the rest of the quarterly cadence in front of me—but think of that then stepping down to the high 5s, that then steps down to the low 5s, that then steps down to 5. That's how you're going to blend to a number in the sort of mid-5s.

Trevor Romeo: Okay, thanks, Patrick. That's helpful. And then maybe just on your M&A pipeline and kind of, I guess, the pipeline plus what you bought maybe within the last quarter or so, if you could just provide maybe some color on the, you know, regional or asset perspective, kind of where you saw attractive opportunities, what you'd see in the near term with your pipeline there.

Speaker #9: So that's the sort of rough cadence of it. That is absent any incremental pricing actions that sort of get taken through the year. And as I said, we think—we hope—that we're able to actually do sort of slightly better than that, right?

Speaker #9: The pricing that you ultimately realize is a function of stick rate. And so when you do pricing actions, you do sometimes have rollbacks that you need to do to establish the sort of firm level of pricing.

Patrick Dovigi: Yeah, I mean, I think we said again, in Q4, the, you know, people were questioning whether or not we would actually deploy, if we'd actually deploy the amount of capital that we had in our sort of initial guidance that we'd have been articulating through the year, just given the slow start to the year and the fact that we were focused on the divestiture and recapitalization of, ES and GIP. You know, we basically deployed close to $1 billion that we said we would. I think when you look at 2026, as we said on Q4, pipeline is, you know, very healthy, a lot of good opportunities, obviously still in diligence on a bunch.

Speaker #9: And obviously, the full extent of those aren't known to us today. We're taking estimates based on our past experience. But that is the basis on which the math would yield that sort of mid-5s number.

Speaker #10: Okay, great. And then my last one—you basically just touched on it in the prior question—but given that FX is moving your financials and your guidance around quite a bit, I was going to ask: Do you have plans to report in US dollars?

Speaker #10: It sounds like you said maybe you've got something in the works, but what would be the timing on that?

Patrick Dovigi: But, you know, again, focused on businesses in markets where we already have existing infrastructure, creating very good synergy opportunities that will sort of yield higher returns on invested capital, versus moving outside and acquiring businesses outside of the existing platform. We're obviously extremely happy with the post-collection network we have throughout, you know, the 10 provinces in Canada and 25 states in the US. So we're gonna continue just driving incremental opportunities on the backs of those facilities and, you know, that's what we're gonna be focused on for 2026. But again, it's gonna be, you know, as we communicated in the, you know, $750 million to $1 billion, as we said in Q4, we think this year could be, you know, even higher than that.

Speaker #9: Yeah, it's a great question and something that we think a lot about because today, FX moves against us is a benefit for our peers.

Speaker #9: So we're sort of moving in opposite directions, and I think it just adds incremental complexity to the comparability. So I think the eventual outcome is that we convert to being a US GAAP reporter.

Speaker #9: Again, eliminating diversion in reporting between us and our peers. And you could evaluate being a US dollar-denominated sort of reporter as well. I mean, more and more, our business has grown in the US.

Speaker #9: However, we still have a very sizable business in Canada, and the sort of backend infrastructure and shared services is all based there. So we'll continue to evaluate. I think, though, if you were to make a change to be a US GAAP filer, it may make sense at that time that you also went to a US dollar currency just to fully align comparability amongst the sort of peer group.

Patrick Dovigi: And, assuming we continue to make our progress through diligence on some of these assets, you know, I think we'll have a pretty good update for everybody, when we report Q1.

Trevor Romeo: All right. Thank you very much.

Speaker #9: The timing for that, Jim, I'll tell you, is—as I was speaking about the Russell—we think there's a path where you can get sort of Russell inclusion midway through this year.

Patrick Dovigi: Thank you.

Operator: Thank you. Our next question comes from Kona Gupta with Scotiabank. You may now proceed.

Speaker #9: The next big inclusions would have required a US GAAP conversion, and I think we intend to be ready to do that as early as Q1 2027.

Luke Pelosi: Thanks, just on the M&A.

Konark Gupta: Thanks, just on the M&A.

Konark Gupta: ...Follow up. In terms of the asset quality that you are finding these days in the marketplace, I mean, a big chunk of the market has already been consolidated, right? And, I mean, obviously, there's still a ton of opportunities for you guys, especially given you're smaller than the rest of the three. But any, any, you know, noticeable differences you're seeing in terms of quality of assets that are coming open to you?

Speaker #9: Now, whether or not we actually sort of go forward at that date or you wait to the end of the year, that's still sort of TBD.

Speaker #9: But it's not going to happen in '26. But we're certainly taking the steps in preparation now to be ready to do that, sometime in the future.

Speaker #9: I could see a potential outcome being you do it at the end of 2027, in advance of 2028. But certainly, we're exploring all options.

Patrick Dovigi: No, I mean, I think, you know, it, it's obviously year by year. You can never predict when a specific asset is gonna come to market. But what we know for certain is that the sellers of these businesses aren't getting any younger. And, you know, as people start thinking about succession and liquidity, that's creating opportunity. And I mean, if you think about the Canadian market, again, you know, basically Waste Management, Waste Connections, and ourselves represent, you know, call it 40-ish% of the market. So 60% of the market continues to be, you know, wide space and non-consolidated.

Speaker #10: Okay. Great. Thanks, Luke. Appreciate

Speaker #10: it. Thank

Speaker #1: You. Our next question comes from Stephanie Moore with Jefferies. You may now.

Speaker #1: proceed. Great.

Speaker #11: Good evening. Thanks, guys. Look, I just wanted to follow up on a question maybe two or three questions ago. We were talking about the outsized margin expansion this year outside of price-cost spread.

Speaker #11: I think, Luke, you did a really good job at the end of the day of outlining kind of all the self-help initiatives, anti-pricing, automation, and the likes that you expected over the next couple of years.

Patrick Dovigi: And you think about the US, you know, about 50% of the market is consolidated by the majors, and that still creates a very good opportunity for all of us to continue acquiring businesses in the markets where we see opportunities for each of our respective businesses. But the quality of the assets continues to be very high. The quality of the assets that we're looking at within the existing pipeline are very good. And again, we think they'll be great contributors to the sort of overall book, and will yield very good double-return invested capital on the backs of our existing infrastructure. So we're feeling very good about where we sit today, and we're feeling very good about 2026 and beyond in that respect.

Speaker #11: Could you maybe give us an update on how those are trending? What we should be thinking about in 2026 that's really moving the needle?

Speaker #11: And I guess, as a follow-up to that, if we do expect to see more outsized M&A even this year or next year, do some of these investments help make those integrations and synergy captures that much more effective?

Speaker #11: Thanks, guys.

Speaker #9: Yeah, thanks, Stephanie. It's a great question. Something that, as we look back on the Investor Day presentation and our outperformance in 2025, gives us even further conviction in our ability to realize those financial benefits from the self-help levers that we'd articulated, based on how successful we were in '25.

Luke Pelosi: And Konar, just to add to Patrick's commentary. You have to remember, I mean, the focus of us on tuck-in acquisitions into our existing platform. We can have a scenario whereby we have a great market and a great asset base, and there's a competitor that doesn't necessarily have a gold star asset, but in our hands, with cost takeout opportunities and other synergy, you can turn that into a very high-quality asset. So what's nice about where we're at in our journey is the ability to densify and tuck in some of our best-in-class markets, and thereby take what is perhaps a suboptimal, little sort of tuck-in on its own, but turn that into something accretive in our hands. And that's really what we're focusing on. What can this business or asset contribute in our hands?

Speaker #9: Look, if you think about the levers to starting with the pricing, I mean, obviously, we started '25 with an expectation of low to mid 5s pricing.

Speaker #9: End of the year at 6.1, nearly 70 bps of outperformance; a big part of that was the realization of those sort of ancillary surcharge programs, as we had sort of anticipated.

Speaker #9: I think we articulated a $40 to $80 million prize there. Taking that at the sort of midpoint, you have roughly the $60 million amount that, I mean, I think we're set up and on pace to recognize that ratably over the four-year period, arguably a little front-end loaded, as we've demonstrated in '25.

Speaker #9: As I said in the paragraph remarks, pricing for 2026 is estimated in the mid-5s range, and any further accelerated implementation of the ancillary surcharges could give upside to that number.

Konark Gupta: Yeah, no, thanks for the color on that. And if I can follow up, I think there's some news around the Toronto recycling contract changes that have happened. I think there's a change of supplier or your third-party partner there. Any sense in terms of, you know, what potential changes might be required on your side to, you know, deliver on the contract in Toronto?

Speaker #9: So we're feeling really good on that aspect or that sort of self-help lever. When you start getting into the middle, and the next one was employee turnover, we said as we reduce this employee turnover, we're going to realize the benefit of the efficiency, the cost of risk, the onboarding, and the productivity associated with that.

Speaker #9: And I think you're seeing that as well. I mean, across the cost category lines this year—from direct labor cost to R&M expense to SG&A—you're seeing the operating leverage come, and part of that is that improved labor turnover.

Operator 2: The person you are calling is not available. Please try again later.

Operator: The person you are calling is not available. Please try again later.

Patrick Dovigi: Sorry about that.

Operator 2: Method one.

Operator: Method one.

Speaker #9: We got to high teens in '25. We see more room for improvement in '26 and '27. And certainly, those benefits are accruing to the bottom line.

Patrick Dovigi: So sorry, in terms of EPR, yeah, I mean, we obviously are doing the exact same work we did before, albeit with different service providers. Meaning, you know, our customer used to be the City of Toronto, and now our customer is Circular Materials. That being said, there's been no real change. Yes, there's a little bit of political fallout in the City of Toronto. You know, the fact that we ended up taking on two more districts than we had before, and there was a loss of some union jobs, I think, that led to some media attention by a couple of, you know, I would say, the more left-leaning papers.

Speaker #9: The fleet conversion and C&G piece, I believe, is the next lever. I mean, I think when we started this, we had a sort of mid- to high-teens percentage of our fleet being C&G.

Speaker #9: And then we brought that up to the mid-20s, and we're now on a path to sort of be close to 30%. And certainly, seeing the benefits of that coming through in the results as well.

Speaker #9: So, I feel really good with the ratable realization of that benefit or that prize that was articulated on that side. And the last one was just the sort of general procurement and overall sort of efficiency in the middle.

Speaker #9: And I think you're seeing that as well. So, when you peel it all back, what gives us a great sense of optimism is we're not relying on any one of those levers to drive outsized performance.

Speaker #9: It's, in fact, the combination of each of them, in small little ways, but all adding up to this differentiated margin expansion that you're seeing in our business versus others.

Patrick Dovigi: That being said, you know, we started collection in Ontario for over a million homes, and, you know, collection success was better than 99.3% in the first month of a very large startup. So, overall, very successful. Province continues to be very happy. You know, ultimately, there's a change in collection days in some of the City of Toronto, which certain residents didn't like or enjoy. But, you know, I think we're largely through that and, you know, now into our second month, and, you know, I think the noise has largely subsided.

Speaker #9: So, '26, we're excited to continue to deliver. As we said, we see avenues of upside on the guide, and certainly, continued outperformance in those levers would be sort of part of that.

Speaker #9: Starting the year, we hope to be able to—‘25 was a great—continue the...

Speaker #9: trend. Thanks, guys.

Speaker #11: Appreciate it.

Speaker #1: Thank you. Our next question comes from Adam Boots with Goldman Sachs. You may now.

Konark Gupta: Okay. Appreciate the time. Thanks.

Speaker #1: proceed. Hi.

Patrick Dovigi: Thank you.

Speaker #10: Good evening. Patrick, you talked about the potential for an outsized year of M&A. Just how far above the $1 billion annual target would you be comfortable going?

Operator: Thank you. Our next question comes from William Griffin with Barclays. You may now proceed.

Speaker #10: I mean, just back-of-the-envelope math, I think every $500 million of incremental M&A only adds 0.1 or 0.2 to leverage.

William Grippin: Great, good evening. Thanks very much for the time. Most of my questions have already been answered, but, just wanted to come back to the update you gave around, the GIP and ES. I appreciate the color there on the performance. I guess, just, do you have any updated thoughts on, on maybe providing some incremental disclosure around those businesses going forward in, in quarterly releases, just to kind of help, you know, investors and, and analysts kind of track the performance of those businesses?

Speaker #12: Yeah, I think where we sit today, you could easily spend $1.5 billion to $2 billion. I think, temporarily, leverage might be sort of in the 3.75 to 3.8 range—so, you know, in the mid-3s.

Luke Pelosi: Yeah, Will, it's Luke. It's a great question and something I know we've talked about in person. You know, in light of the fact that both of those recapitalization or carve-out just happened, you know, we all have this very fresh mark. So the cost basis, as Patrick referenced, you know, roughly close to $3 billion across the two assets today is pretty sort of fresh. So we didn't include something at this, but absolutely, as we go forward, we're gonna come up with the appropriate level of disclosure, such that you guys can have a handle on how those businesses are doing, what the sort of debt level of them are, and what our sort of equity interest is. So you'll have an ability to, you know, calculate that $6 per share math that Patrick was doing. So we will do that.

Speaker #12: So I think that's where I think is where you sort of peak out before you would need some form of equity. And I think going back to I think we've telegraphed in Q4 and sort of late Q3 was that we think that this year could be that being said, we're still on diligence on a lot of these opportunities.

Speaker #12: And nothing's for certain. But yeah, your math is right. Obviously, depending on what the purchase price is for your buying, that sort of—but in that range, you're correct.

Speaker #12: And I think that you would still end up in the low to mid 3s, even deploying that amount of—

Speaker #12: capital.

Speaker #10: And then

Speaker #10: Luke, I think you said for 2026, margin guidance, there's 100 basis points of underlying margin expansion, 25 basis points headwind for commodities. What are some of the other puts and takes that get you to 60 basis points?

Luke Pelosi: But as of today, we're just thinking, hey, you had $1.7 billion cost base in ES, roughly $1 billion in the GIP asset, and then I think we valued the option on ES at a couple of hundred million bucks. So just under $3 billion of value at cost across those two businesses today. All right, that's all for me. Thanks very much.

Speaker #10: And then can you just help us think through the cadence of going from 150 basis points year-over-year, and I think guidance obviously embeds decelerating margin expansion throughout the—

Operator: Thank you. Our next question comes from Jerry Revich with Wells Fargo. You may now proceed.

Speaker #9: Yeah, Adam, great year—question. If you think about 60 basis points of margin expansion on the headline number, included therein, you’ve got a 25 basis point headwind from commodities.

Jerry Revich: Yes, hi. Good evening, everyone. Luke, I wanted to ask you as we think about hi, Patrick. I wanted to ask you as we think about the free cash flow profile of the business, so now that you've got a cleaner portfolio, how should we be thinking about CapEx to sales, you know, beyond 2026? So the core business looks like there's about 11.5% CapEx to sales, and you have the high returns growth CapEx on top of it. As a starting point for 2027 and beyond, how would you counsel us to think about both growth CapEx opportunities as well as just normalized CapEx to sales versus what we've got in 2026?

Speaker #9: You got a 5 basis point headwind from the Q1 year-over-year comp on that hurricane volume that I alluded to. Again, we always hope there are no natural disasters.

Speaker #9: But in 2025, we enjoyed excess volume at a high margin. So back in that, that's another five dips. I think about a 10 basis point headwind from FX and some of the carbon credits that you realized in '25.

Speaker #9: So, when you think about the 60 basis point headline number, backing out those amounts yields about 100 basis points, sort of the underlying piece overall.

Speaker #9: When you think about the cadence, Q1, as I said, the 150-basis-point beat based on the guide year over year. Q2 of last year, you enjoyed an exceptional sort of margin performance.

Luke Pelosi: Yeah, thanks, Jerry. It's a great question, and I know one that sort of industry has a wide sort of focus is on. I think today, normal course CapEx, you know, if I was underwriting them all, it's an 11 to 11.5% number, right? I think probably 11.5% today as we sort of just get through some tariffs, et cetera, and maybe that gravitates back down to that normal sort of 11% spend. You know, I would characterize that as the normal course, which is inclusive of maintenance and normal course growth. Obviously, in years where we're gonna be delivering outsized growth, whether it's EPR or similar type of investments, you know, there could be opportunity for spend above and beyond that, and we'll call that out as we have.

Speaker #9: And so, actually, contemplating, I think flat to a little backwards in Q2. And then Q3 and Q4, modestly ahead. I think what you're seeing is, as the business matures and our geography expands in the south, you're seeing a bit of a flattening of that sort of seasonality.

Speaker #9: So, as opposed to the peaks and valleys from Q1 to Q3 that we historically had, you're seeing a bit of a sort of flattening of that year over year.

Speaker #9: And we expect sort of more of the same, but that's the basis for the expectation of the cadence throughout the year. You also have, Adam, recall the commodity comp will be a bigger drag in the first half of the year.

Luke Pelosi: Where we sit today, you know, as I articulated to the other question, I think next year's growth spend is currently contemplated to step meaningfully down from this year's, as really EPR is behind us, and you just have the sort of tail end of building out the sort of RNG facilities. So the truth is, as we've said since our 2023 capital allocation framework, we've looked at the growth CapEx similar to M&A, and if we could find more opportunities like RNG and EPR, we would be very inclined to invest in those based on the sort of returns profile. Where we sit today, we don't see anything else on block that is gonna warrant that same carve-out as we've done for EPR and RNG. So we'd expect these just to play off and then roll off, and we'll just be back to a singular CapEx number.

Speaker #9: And then that steps down as you go throughout the year. So the underlying will have fewer adjustments to achieve by the time you get to Q4.

Speaker #9: If commodity prices stay where they are,

Speaker #9: If commodity prices stay where they are today, great.

Speaker #10: Thanks so much.

Speaker #1: Thank you. Our last question comes from Audit Tressa with Cycle. You may now.

Speaker #10: All right, thanks for taking my questions. Just a quick one—in terms of the reported volume of 50 bps for 2025, how much of that was from EPR and R&G ramping up?

Luke Pelosi: But certainly, should by regulation or otherwise we see opportunities as attractive as these, we're going to go after those, and we'll talk about the appropriate stratification or bifurcation of our CapEx at that time.

Speaker #12: R&G had a de minimis component to the overall thing because R&G is much less a revenue story for us than it is. There's a little bit in there from R&G ramping up.

Jerry Revich: Super. And separately, Patrick, can I ask you, given the strong M&A activity over the course of 2025, normally we see you folks deliver really good synergies in year two of integration. Can you just talk about for some of the larger deals how those assets are performing and whether we could see a notable tailwind 2026 versus 2025 as you integrate those assets?

Speaker #12: But that's not a sort of significant component of that. I think when you look at EPR and you look at our Canada-wide sort of volume, I think the numbers that we would have reported was EPR was about $10 million in Q1, roughly $20 million in each of Q2 and Q3.

Speaker #12: And then, as you had lapped the Q4, it was de minimis. I think it was sort of $5 or $7 million in Q4.

Speaker #12: So you certainly got some outsized contribution from that. Where we take comfort is, even when you strip that out, when you think about some of that hurricane volume they're comping year over year, you're still, I think, at an industry-leading sort of volume print.

Patrick Dovigi: Yeah, I mean, there was nothing overly large that sort of happened in 25. That being said, you know, when we embarked on the M&A pipeline for 25, we did, just given that we were taking a year and shoving it into basically six months, we really focused on the ones that were most accretive, that were gonna, you know, give us the biggest bang for our buck quickest. And I think that's what gives us a lot of conviction around some of the comments we made in our prepared remarks. You know, I think if you look at the previous 20 quarters, you know, of the business, I think, you know, the previous 20 quarters, we really sort of met or exceeded expectations.

Speaker #12: Again, just going back to some of our market selection, where we enjoy volumetric growth, is based on the macro that's happening in our Texas markets. That helps sort of offset some of the C&D-related exposure.

Speaker #10: All right, thank you. And just in terms of your guide for volume for next year, what are you sort of building into your guide in terms of recovery?

Patrick Dovigi: And, you know, I think there's multiple levers and multiple avenues for us to continue to exceed expectations in 2026. And a big part of that is, you know, realizing synergies on some of these opportunities that we closed in late Q3 and early Q4. So you're right, you know, we will continue to deliver on those, and I think those will contribute to, you know, us exceeding expectations for 2026, coupled together with, you know, what we think is a very compelling pipeline for 2026. And we looked at some great updates for you, as we report Q1 and, you know, give some good updates for the balance of the year as we get through the beginning of the year.

Speaker #10: Are you seeing—because you mentioned some green shoots that you're seeing—so are you trying to, are you thinking of building in some cyclical volumes in there or anything like that?

Speaker #10: Or is it really what you're seeing right?

Speaker #10: now? No.

Speaker #12: Our guide is based on the environment that we see today. So we just assume sort of status quo. The 'green shoots' sort of commentary was more, as I was alluding to, some of these conversations and touchpoints we've been having with our customers.

Speaker #12: Look, January is going to be a tough volume month right out of the gate, just because when you think about the amount of snow that's come and blanketed Wisconsin, Michigan, Toronto—these are markets that are used to snow.

Speaker #12: But this has been an exceptional level of snow, so I think you got a pretty tough start to the year in January. But again, it's just sort of structurally, with some of the contracts we've won, EPR coming online and the like, that gives us confidence to be able to print a slightly positive number.

Jerry Revich: Sorry, Patrick, if I may just put a finer point on that. So typically in year one, you work down by about a turn, in terms of synergy relative to the acquisition multiples, what we typically see. So just applying that, given the outsized M&A in 25, it does feel like that's a big chunk of the core EPS growth that you have baked into the numbers, unless I'm missing something about the nature of the deals as normal.

Speaker #12: Certainly, any recovery as we think about our C&D volumes, or just broader macroeconomic activity, could provide a tailwind above and beyond. But that would all be additive.

Speaker #12: We're just assuming status quo with the current sort of macro environment.

Speaker #10: Great. Thanks for taking my

Speaker #10: question. All right.

Speaker #2: Thank you so

Speaker #1: Thank you. At this time, I would now like to pass the conference back over to Patrick Dovigi for any closing remarks.

Luke Pelosi: No, Jerry, it's Luke speaking. I think you're absolutely right. We've demonstrated, you know, the outsized margin expansion that we've delivered and enjoyed over the past three or four years is, you know, a large part of that is being driven by that synergy capture, as you've articulated. So if you think about the 2026 guide, you know, Tyler, on the first question, was trying to parse it out, but even when you peel it all back, you're seeing margin expansion above and beyond what normal course price-cost spread should provide. And a component of that is exactly as you said, that you're realizing the synergy benefit of all that M&A we did in 2025 and also, you know, still the tail end of what you did in 2024. So you're absolutely right.

Speaker #12: Thank you, everyone, for joining. Much appreciated, and look forward to catching up when we report Q1. Thank you.

Speaker #12: You. That concludes today's conference call.

Luke Pelosi: Typically, if you're gonna pay, I think Investor Day, we said we pay sort of 8 times on the face of it, and then over time can take that cost of ownership multiple down through synergy capture. That is happening. You saw that in 2025, you saw that in 2024, and certainly for us to be able to have a 2026 guide that shows 60 basis points of margin expansion, including, don't forget, like a 25 basis point plus headwind from commodities, a few other puts and takes, you're actually at an underlying of closer to 100 basis points of margin expansion in 2026. Certainly contributing in there is the synergy capture from the acquisitions that you completed in 2025 and previously.

Jim Skull: All right. Thank you, Trent.

Jerry Revich: All right. Thank you, Trent.

Operator: Thank you. Our next question comes from Toby Sommer with Truist. You may now proceed.

Tobey Sommer: Thank you. I was hoping you could elaborate a little bit more on some of the green shoots that you said you might be seeing with respect to volume in 2026, in both the core and perhaps even ES. Thanks.

Luke Pelosi: Yeah. So Toby, it's Luke speaking. I was speaking in relation to GFL and sort of, you know, spoke to that. I think on the macro side, some of even the indices, whether it's PMI or PPI, are actually sort of starting to turn, you know, if it's positive or showing some sort of green shoots coming out of that. But it's also just in the sentiment in talking to some of our larger customers as to what their capital plans are for 2026. Very clearly in 2025, people shelved a lot of capital plans, whether it was expansionary or the like, as they were waiting out to see how the world was gonna unfold.

Luke Pelosi: I think just having conversations with some of our large customers today, it seems clear that people are figuring out a way to navigate in this period of uncertainty and are going to invest in some of that sort of capital spend that can end up being volume on our side. We also saw, you know, on the special waste side, you know, we alluded in the prepared remarks, Q4, you know, some surprise special waste coming out of activity in some of our markets that wasn't otherwise contemplated. As you know, that's often a leading indicator for activity that then follows on the back of that.

Luke Pelosi: So while we would certainly like to see more, you know, green shoots, so before we get sort of too ahead of our skis, it's certainly positive to just see those indicative indicators suggesting that maybe there's some opportunity on the horizon.

Tobey Sommer: Thank you. That's helpful. With respect to the moving the headquarters to the US and inclusion in various indexes, could you maybe give us a little bit of color on timeline, any hurdles or decisions that you have to weigh in order to pursue various inclusions?

Luke Pelosi: Yeah. So right out the gate, by virtue of the changes that have already occurred, we've become eligible for the Russell set of sort of indices. The timeline as to that, how that typically works is midspring, I think in April, they'll make an evaluation, and, you know, we believe that we'll check the boxes to be eligible for inclusion, and the actual inclusionary date would happen mid of the year. I think it's in June. And if you look just on the face of it, I mean, the Russell Index inclusion alone could yield somewhere in the mid-single digits of our float, right? So an incremental permanent demand that's going to come on.

Luke Pelosi: By virtue of this step that we've taken, the next step would become the eligibility for other US-based indices, the CRSP being one that is available to us and we think we're eligible, and then obviously the S&P sort of 400/500. Further steps would be required, most notably US GAAP and, you know, no longer being a foreign private issuer. Steps are underway for us to be eligible, both from a US GAAP conversion as well as to be filing on the domestic forms. And in doing so, you could then open up that incremental index demand. And if you look at, you know, what the index specialists say, there's upwards of another sort of 10 to 15% of volume of our, sorry, float, that could be in demand from that.

Luke Pelosi: If you just look overall as to how much passive demand is in the GFL stock versus our peers, there's a meaningful gap, and I think this headquarters announcement, you know, is a first step in starting to close this. So there's a significant degree of incremental demand that we think over the short and medium term should come into the name, and we're gonna continue to actively pursue that. As Patrick alluded to in his opening remarks, one of the benefits of the current strategy, thanks to some of the sort of recent changes to the S&P definitions, is none of these changes preclude our eventual inclusion or eligibility, therefore, into the TSX 60, which, as many know, you know, would drive even more incremental passive demand.

Luke Pelosi: We think we have a very nice near, medium, and longer term tailwind that should drive a significant incremental permanent demand for a large component of our flow.

Tobey Sommer: Appreciate the detail. Thanks, Luke.

Operator: Thank you. Our next question comes from Jim Skull with TD Cowen. You may now proceed.

Jim Skull: Hey, guys, thanks for taking my questions. So Luke, just a clarification on the pricing. I think... So pricing was 6.4% in the fourth quarter. I think you said Q1, your mid-4s or, you know, in the 6s. So, and I think you said you're, you know, largely 80% contracted through the year as of Q1 or something like that. So help me understand. I mean, I know that pricing will bleed lower just the math of it throughout the year, but, like, how do you get to mid-5s from, you know, 6.4 or solidly in the 6s?

[Analyst] (TD Cowen): Hey, guys, thanks for taking my questions. So Luke, just a clarification on the pricing. I think... So pricing was 6.4% in the fourth quarter. I think you said Q1, your mid-4s or, you know, in the 6s. So, and I think you said you're, you know, largely 80% contracted through the year as of Q1 or something like that. So help me understand. I mean, I know that pricing will bleed lower just the math of it throughout the year, but, like, how do you get to mid-5s from, you know, 6.4 or solidly in the 6s?

Luke Pelosi: ... Yeah. Hey, Jim. Thanks, thanks for the question. It's a good one. I know sometimes the pricing math can get a little confusing, but it's really a function of, you know, the quarter over the prior year quarter. And during a period of ramping pricing during the year, you've effectively... The pricing actions I did in each Q2 2025, I now have certainty of those rolling over into each Q1 of 2026, and it therefore just gives me a high degree of certainty of the actual dollars of price that will be realized in each of these quarters.

Luke Pelosi: So if you think about a Q1 number being in a sort of mid-6s, and if that then steps down, and forgive me, I don't have the rest of the quarterly cadence in front of me, but think of that then stepping down to the high 5s, that then steps down to the low 5s, that then steps down to 5. That's how you're gonna blend to a number in the sort of mid-5s. So that's the sort of rough cadence of it. That is absent any incremental pricing actions that sort of get taken through the year. And as I said, you know, we think, we hope that we're able to actually do sort of slightly better than that, right?

Luke Pelosi: The pricing you ultimately realize is a function of stick rate, and so when you do pricing actions, you do sometimes have rollbacks that you need to do to establish the sort of firm level pricing. Obviously, the full extent of those aren't known to us today. We're taking an estimate based on our past experience, but that is the basis on which, you know, the math would yield that sort of mid-fives number.

Jim Skull: Okay, great. And then, my last one, you basically just touched on it, but in the prior question. But given that FX is moving your financials and your guidance around quite a bit, like, I was gonna ask, do you have plans to report in US dollars? It sounds like you said maybe you've got something in the works, but what would be the timing on that?

[Analyst] (TD Cowen): Okay, great. And then, my last one, you basically just touched on it, but in the prior question. But given that FX is moving your financials and your guidance around quite a bit, like, I was gonna ask, do you have plans to report in US dollars? It sounds like you said maybe you've got something in the works, but what would be the timing on that?

Luke Pelosi: Yeah, it's a great question and something that we think a lot about, because today, FX moves against us is a benefit for our peers, so we're sort of moving in opposite directions, and I think just adds incremental complexity to the comparability. So I think the eventual outcome is that we convert to being a US GAAP reporter, again, eliminating, you know, diversion in reporting between us and our peers. And, you know, you could evaluate being a US dollar-denominated sort of reporter as well. I mean, more and more our business has grown in the US. However, we still have a very sizable business in Canada, and, you know, the sort of back-end infrastructure and shared services is all based there. So we'll continue to evaluate.

Luke Pelosi: I think, though, you know, if you were to make a change to be a US GAAP filer, it may make sense at that time that you also went to a US dollar currency, just to fully align comparability amongst the sort of peer group. The timing for that, Jim, I'll tell you, is, you know, as I was speaking about the Russell, we think there's a path where you can get sort of Russell inclusion midway through this year. The next big inclusions would require a US GAAP conversion, and I think we intend to be ready to do that as early as 1 January 2027. Now, whether or not we actually sort of go forward at that date or you wait till the end of the year is still sort of TBD, but it's not gonna happen in 2026.

Luke Pelosi: But, you know, we're certainly taking the steps in preparation now to be ready to do that, you know, sometime in the future. I could see a potential outcome, be you do it at the end of 2027, you know, in advance of 2028, but certainly we're exploring all options.

Jim Skull: Okay, great. Thanks, Luke. Appreciate it.

[Analyst] (TD Cowen): Okay, great. Thanks, Luke. Appreciate it.

Operator: Thank you. Our next question comes from Stephanie Moore with Jefferies. You may now proceed.

Stephanie Moore: Great. Good evening. Thanks, guys. You know, look, I just wanted to follow up on a question maybe two or three questions ago, where you were talking about the outsized margin expansion this year outside of price-cost spread. You know, I think, Luke, you did a really good job at the analyst day of outlining kind of all the self-help initiatives, you know, ancillary pricing, automation, and the like, that you expect over the next couple of years. Could you maybe give us an update on how those are trending? You know, what we should be thinking about in 2026 that's really moving the needle? And I guess as a follow-up to that, you know, give...

Stephanie Moore: If we do expect to see a more outsized M&A, you know, this year or next year, do some of these investments help make those integrations and synergy capture steps that much more effective? Thanks, guys.

Luke Pelosi: Yeah, thanks, Stephanie. It's a great question. You know, something that as we look back on the Investor Day presentation and our outperformance in 2025, you know, gives us even further conviction in our ability to realize those financial benefits from the self-help levers that we'd articulated based on how successful we were in 2025. Look, if you think with the levers of start one, starting with the pricing, I mean, obviously, we started 2025 with an expectation of low to mid-5s pricing, ended the year at 6.1, you know, nearly 70 basis points above performance. You know, a big part of that was the realization of those sort of ancillary surcharge program, as we had sort of anticipated. I think we articulated a $40 to 80 million prize there.

Luke Pelosi: You know, taking that at the sort of midpoint, you know, roughly the $60 million amount that, I mean, I think we're set up and on pace to recognize, you know, that ratably over the four-year period, arguably a little front-end loaded, as we've demonstrated in 2025. You know, as I said in the prepared remarks, pricing for 2026 estimated in the sort of mid-5s range and any, you know, further accelerated implementation of the ancillary surcharges could give upside to that number. So we're feeling really good on that aspect or that sort of self-help lever. When you start getting into the middle, and the next one was employee turnover.

Luke Pelosi: We said, as we, you know, reduce this employee turnover, we're gonna realize the benefit of the efficiency, the cost of risk, the onboarding and the productivity associated with that, and I think you're seeing that as well. I mean, across the cost category lines this year, from direct labor costs to R&M expense to SG&A, you're seeing the operating leverage come, and part of that is that, you know, improved labor turnover. We got to high teens in 2025. We see more room for improvement in 2026 and 2027, and certainly those benefits are accruing to, to the bottom line. The next, the fleet, conversion and CNG piece, I believe, is the next lever.

Luke Pelosi: I mean, I think when we started this, we had a sort of mid- to high-teens percentage of our fleet being CNG, and then we brought that up to mid-20s, and we're now on a path to sort of be at, you know, close to 30% and certainly seeing the benefits of that coming through in the results as well. So feel really good with the ratable realization of that benefit or that prize that was articulated on that side. And the last one was just the sort of general procurement and overall sort of efficiency, you know, in the middle. And I think you're seeing that as well. So, you know, you peel it all back, what gives us, you know, a great sense of optimism is we're not relying on any one of those levers to drive outsized performance.

Luke Pelosi: It's in fact, the combination of each of them in small little ways, but all adding up to, you know, this differentiated margin expansion that you're seeing in our business versus ours. So 2026, we're excited to, you know, continue to deliver. You know, as we said, we see avenues of upside on the guide and certainly continued outperformance in those levers will be sort of part of that. 2025 was a great starting year and, you know, we hope to be able to continue the trend.

Adit Shrestha: Thanks, guys. Appreciate it.

Stephanie Moore: Thanks, guys. Appreciate it.

Operator: Thank you. Our next question comes from Adam Bubes with Goldman Sachs. You may now proceed.

Adam Bubes: Hi, good evening. Patrick, you talked about potential for an outsized year of M&A. Just how far above the $1 billion annual target would you be comfortable going? I mean, just back of the envelope math, I think every $500 million of incremental M&A only adds 0.1 or 0.2 to leverage.

Patrick Dovigi: Yeah, I think, you know, I think, you know, we think where we sit today, you could easily spend $1.5 to 2 billion. I think temporarily, you know, leverage might be sort of in the 3.75 to 3.8 range intra-quarter, but then you still exit the year in the mid-3s. You know, so I think that's why I think as you sort of peak out before, you would need some form of equity. And I think, you know, going back to... I think we've telegraphed, you know, in Q4 and sort of late Q3, was that we, you know, we think that this year could be. That being said, you know, we're still diligent in a lot of these opportunities and nothing's for certain. But yeah, your math is right.

Patrick Dovigi: Obviously, depending on what the purchase price is for, you're buying that sort of... But in that range, you're correct. And I think, you know, that you would still end up in the low to mid-threes, even deploying that amount of capital.

Adam Bubes: And then, Luke, I think you said, for 2026 margin guidance, there's 100 basis points of underlying margin expansion, 25 basis point headwind for commodities. What are some of the other puts and takes that get you to 60 basis points? And then can you just help us think through the cadence of going from 150 basis points year-over-year? And it, I think guidance obviously embeds decelerating margin expansion throughout the year.

Luke Pelosi: Yeah, Adam, great, great, question. If you think about 60 basis points margin expansion on the headline number, you know, included therein, you got a 25 basis point headwind from commodities. You got 5 basis point headwind from the Q1 year over year comp on that hurricane volume that I alluded to. Again, you know, we always hope there is no natural disasters, but in 2025, we enjoyed excess volume, you know, at a high margin. So backing that it's under 5 bps. I think you have about a 10 basis point headwind from FX and from the carbon credits that you realized in 2025. So when you think about the 60 basis point headline number, backing out those amounts, you know, it yields about 100 basis points, sort of underlying piece overall.

Luke Pelosi: When you think about the cadence Q1, you know, as I said, the 150 basis point beat based on the guide year-over-year. Q2 of last year, you know, you enjoyed an exceptional sort of margin performance, and so we're actually, you know, contemplating, I think, flat to a little backwards in Q2, and then Q3 and Q4, you know, modestly ahead. I think what you're seeing is, as the business matures and our geography expands in the south, you're seeing a bit of a flattening of that sort of seasonality. So as opposed to the peaks and valleys from Q1 to Q3 that we historically had, you're seeing a bit of a sort of flattening of that year-over-year, and we expect sort of more of the same.

Luke Pelosi: But that's the basis for the, you know, expectation of the cadence throughout the year. You also have, Adam, recall, the commodity comp will, you know, bigger drag in the first half of the year, and then that steps down as you go for- as you go throughout the year. So the underlying will have less adjustments to achieve by the time you get to Q4, if commodity prices stay where they are today.

Adam Bubes: Great. Thanks so much.

Operator: Thank you. Our last question comes from Adit Shrestha with Stifel. You may now proceed.

Adit Shrestha: Hi, thanks for taking my questions. Just a quick one. In terms of the reported volume of 50 basis points for 2025, how much of that was from EPR and RNG ramping up?

Luke Pelosi: RNG had a de minimis component to the overall thing. Because RNG is much less a revenue story for us than it is. There's a little bit in there from RNG ramping up, but that's not a sort of significant component of that. I think when you look at EPR and you look at our Canada-wide sort of volume, you know, I think the numbers we would have reported was, you know, EPR was about $10 million in Q1, roughly $20 million in each of Q2 and Q3. And then as you had lapped the Q4, it was de minimis. I think it was like sort of $5 or 7 million in Q4. So you certainly got some outsized contribution from that.

Luke Pelosi: Where we take comfort is even when you strip that out, when you think about, you know, some of that hurricane volume they're comping, you know, year over year, you're still, you know, I think at an industry-leading sort of volume print. Again, just going back to some of our market selection, where, you know, we enjoy volumetric growth is based on the macro that's happening in Central Florida, Georgia, and, you know, some of our Texas markets. That helps sort of offset some of the C&D related exposure.

Adit Shrestha: Thank you. And just in terms of your guide for volume for next year, what are you sort of, kind of, building into your guide in terms of recovery? Are you seeing, because you mentioned some green shoots that you're seeing. So are you trying to, you know, are you thinking of building in some physical volumes in there or anything like that? Or is it really what you're seeing right now?

Luke Pelosi: No, our guide is based on the environment that we see today, so we just assume sort of status quo. You know, the green shoot sort of commentary was more, you know, as I was alluding to some of these conversations and touch points we've had with our customers. Look, January is gonna be a tough volume month right out the gate, just because when you think about the amount of snow that's come and blanketed Wisconsin, Michigan, you know, Toronto, these are markets that are used to snow, but this has been, an exceptional level of snow. So I think you got a pretty tough start to the year in January.

Luke Pelosi: But again, it's just sort of structurally on some of the contracts we've won, EPR coming online and the like, that gives us sort of confidence to be able to print, you know, a slightly positive number. Certainly, any recovery, as we think about our C&D volumes or just broader macroeconomic activity, could provide a tailwind above and beyond, but that would all be additive. We're just assuming status quo with the current sort of macro environment.

Adit Shrestha: Great. Thanks for taking my question.

Patrick Dovigi: Thank you so much.

Operator 2: Thank you. At this time, I'll now like to pass the conference back over to Patrick Dovigi for any closing remarks.

Operator: Thank you. At this time, I'll now like to pass the conference back over to Patrick Dovigi for any closing remarks.

Patrick Dovigi: Thank you everyone for joining. Much appreciated. Look forward to catching up, when we report Q1. Thank you.

Operator 2: That concludes today's conference call. Thank you for your participation. You may now disconnect your line.

Operator: That concludes today's conference call. Thank you for your participation. You may now disconnect your line.

Q4 2025 GFL Environmental Inc Earnings Call

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