Good evening, everyone, and thank you for joining today's GFL Fourth Quarter 2025 Earnings Call. My name is Jasmine, and I will be your moderator. I would now like to turn the call over to Patrick Dovigi, Founder and CEO of GFL. You may proceed.

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.

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 U.S. 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 U.S. 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. 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 U.S. securities regulators. I'll now turn the call back over to Patrick.

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. 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. 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 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 including enhanced operational efficiency, improving labor turnover, fleet optimization and procurement benefits as a result of our greater scale. The combined impact 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 results 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. 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 to 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. 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 entered 2026 with ultimate balance sheet flexibility. This set up, together with natural deleveraging from organic growth will allow us to execute on a robust M&A pipeline while maintaining leverage in the low to mid-3s as a range to which we remain highly committed. As for the base business guidance, Luke will walk us through the details, but as 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 U.S. The relocation broadens 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. 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 Q&A.

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 bps 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. 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 margin 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 U.S. although U.S. 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. Excluding the impact of commodities and these other nonreflective 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. 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. 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 are 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 setting us up for meaningful revenue rollover into 2026, consistent with the initial framework we provided. 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 3.4x. 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 3.1x. 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. 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-5s, driven by our base pricing programs and incremental contributions from EPR. The pricing plan includes modest progression in our ancillary surcharge programs and implementation acceleration in this area will be a source of upside. 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 of 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. Adjusted EBITDA in 2026 is expected to be $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 4-year period since 2022. Adjusted free cash flow increases to $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 RNG projects have shifted into 2027. 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 of CapEx, approximately 50% of the amount deployed in 2025, consistent with previous expectations.

One moment, ladies and gentlemen. I'll try to get our speakers reconnected. Pardon the interruption. We now have our speakers back on, and we will now begin the Q&A session. Our first question comes from Patrick Brown with Raymond James.

Can you all hear me?

Yes. Can you hear us better?

Yes, you're there. Okay. Good deal. Patrick, I appreciate the guidance of low 3s on the leverage. But does that assume no incremental M&A and buyback? Is that right? And I think you mentioned last quarter that '26 could be an outsized M&A year. I understand that you're very active in the back half of '25, but is that still your base case as we sit here today?

Yes. I think to be crystal clear on the leverage point, we are committed to leverage, as we said, in the low to mid-3s. I think Luke made the point that absent any M&A, you end the year close to 3 turns, obviously, doing incremental M&A and buybacks would increase that number. But we are definitely committed to exiting 2026 at sort of low to mid-3s. Could there be a quarter where there's 25 to 40 basis points of leverage move around in a quarter? Sure. But we end the year exiting low 3s to mid-3s.

Okay. Perfect. Exactly what I was looking for. Okay. And then, Luke, if I just try to do the EBITDA bridge, 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 in 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 because it feels doable.

Yes, 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, right? So a couple of things. Commodities 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 '25, 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, I think, was the right way of thinking about it at the beginning of '25 with the outperformance that '25 had, 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. And as you said, we're feeling confident that, that's something that can be achieved.

Our next question comes from Sabahat Khan with RBC.

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? How does that sort of flow in through the course of the year? And just, I guess, 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 '26 and maybe into '27?

Yes, that's a great question. This is Luke. The $175 million is mostly expected in the early part of the year. The main focus for EPR this year will be on collecting payments related to the trucks. We anticipate receiving around $100 million to $120 million of that in the first quarter, with the rest coming in gradually throughout the year. As we mentioned, the growth in RNG contributions this year will be limited as some projects have been pushed to 2027. Thus, the RNG contribution in our current plan for 2025 remains relatively flat in terms of dollar amounts. We expect a slight increase in production alongside a lower RIN price. The significant growth in RNG projects is expected to pick up in 2027 and 2028. Growth spending in 2027 will decrease substantially from where we are now, as EPR will mostly be completed and the scale of RNG projects will still be limited. We will provide more updates on 2027 as we get closer to that timeframe, but currently, we anticipate a notable reduction from this year.

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 '25? If you can just kind of break out the volume piece a little bit.

Yes. We're providing our guidance based on the current macroeconomic conditions, which remain weak, particularly in the construction and industrial sectors. However, there are some signs of potential opportunities that could enhance our guidance. Looking at 2025, the first quarter began relatively strong before some uncertainties arose in the macro environment, making it a tougher comparison. We anticipate a decline in volume for Q1, but this should improve as we move past the challenging quarters experienced in the latter half of this year. Additionally, the contribution from EPR will be beneficial. We take pride in our market selection, focusing on faster-growing regions in the South and Southeast, where, despite uncertain macro conditions, we are seeing volume growth thanks to population movements and new business formations. We feel optimistic about our position and see several potential upsides beyond our current projections, while we are happy to report a year of positive volume growth. Although the industry overall may show slight negative trends, we remain confident in our positive outlook for 2026.

And 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 '25. It sounds like the M&A pipeline is reasonably good. How do you guys sort of balance the 2 in terms of what seems more attractive for your analysis or just how you view it?

Yes. 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. 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 in some of these opportunities that are in front of us. 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. 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 sort of the long-term value creation for the business will be. But 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 we'll continue looking at both and weighing them as the opportunities continue to present themselves.

Our next question comes from Kevin Chiang with CIBC.

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. Just wondering how we should think about the cadence of pricing in '26 as you kind of average out to the mid-5s that's in your guidance there?

Yes. 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. So where we're sitting is that Q1 is a sort of mid-6 or better number. And then that ratably kind of steps down to a kind of 5 type number by the end of the year. 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. 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. 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.

That's helpful. I'm curious about your minority investments, GIP and Environmental Services. How did they perform in 2025? Given the somewhat weak industrial economy, did those businesses show the same resilience as your Solid Waste business? Did you end the year as you expected a year ago? Any insights you can share would be appreciated.

Yes. Looking at the ES business, we're projecting around $525 million of EBITDA for 2025, driven by initial optimism surrounding a new President. However, due to some softness in the industrial economy, that business ended up just above $500 million. While this was slightly below our expectations, it wasn't a significant deviation. We had solid growth plans for that sector. As for GIP, it's primarily an industrial business, with 75% to 80% of its work coming from government contracts, mainly focused on the transportation sector, which remains stable. This business performed as expected, entering the year with EBITDA in the $300 million range, which aligns with our discussions. Considering both businesses, we see a value of $5 to $6 per share at cost. This is part of why we consider opportunistic share buybacks; our projections for 2026 suggest GFL might be trading around 12.5 times earnings based on the equity value tied to those two businesses, which are not reflected in our current estimates. That's why we find share buybacks to be particularly appealing at this time.

Our next question comes from Bryan Burgmeier with Citi.

Sorry if I missed this in the prepared remarks. Did GFL provide 1Q guidance, like I think you did on the 4Q call last year? Maybe I missed it or maybe we blame the cooperator or maybe you're shifting strategy a tiny bit.

Yes. 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 billion 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.

Okay. Okay. And then just one more question for me. Just maybe as RNG production, I know these projects have been pushed out, but just as we are gradually kind of ramping up production, 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, start-up costs? Just any kind of broader comments there.

Yes. No material change in the actual costs. I think, obviously, we're taking a very careful look at building out the larger sites before we're building out some of the smaller ones. So I think what we've articulated in the Investor Day presentation, we said about $175 million of RNG 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 million to $150 million range. That being said, EPR is outperforming. So those 2 numbers as a whole are going to be on plan to our Investor Day presentation.

And Bryan, 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. What we have noticed though is some of the start-up 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, 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 of shifting to the right. And then Patrick said, just ensuring that the overall envelope that we originally identified remains the appropriate level. 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 may be a reallocation between the 2 components therein.

Our next question comes from Trevor Romeo with William Blair.

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 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?

Yes, I would say we are mostly done. There may be some collection contracts to be awarded in the next couple of years, but those would fall under the normal course of business with usual residential wins. Materially, we have mostly completed that process now. Alberta was the last province to finalize its contracts, and we ended up sharing the processing responsibilities for Alberta with Waste Management. We both hold portions of the province. This was really the final significant contract to be awarded in Canada. From an opportunity standpoint, I believe that by the end of 2027, all EPR revenues will be reflected in the profit and loss statement.

Our next question comes from William Grippin with Barclays.

Great. 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 maybe providing some incremental disclosure around those businesses going forward in the quarterly releases just to kind of help investors and analysts kind of track the performance of those businesses.

Yes, Will, 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 recapitalization or carve-out just happened, we all have this very fresh mark. So the cost basis, as Patrick referenced, roughly close to $3 billion across the 2 assets today is pretty sort of fresh. So we didn't include something at this. But absolutely, as we go forward, we're going to come up with an 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. So we will do that. 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 2 businesses today.

Our next question comes from Jerry Revich with Wells Fargo.

I wanted to ask how we should be thinking about the free cash flow profile of the business now that you have a cleaner portfolio. With the core business showing about 11.5% CapEx to sales and the potential for high returns, how should we approach growth CapEx opportunities as well as normalized CapEx to sales in relation to guidance for 2027 and beyond?

Yes. Thanks, Jerry. It's a great question, and I know one that the industry is a wide way of focuses on. I think today, normal course CapEx, if I was underwriting a model, it's an 11% to 11.5% number. 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. 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, 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 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 based on the sort of returns profile. 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 RNG. So we expect these 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.

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 2 of integration. Can you just talk about for some of the larger deals and how those assets are performing and whether we could see a notable tailwind '26 versus '25 as you integrate those assets?

Yes, there wasn't anything particularly significant that happened in 2025. However, when we started the M&A pipeline for that year, we concentrated on the transactions that would provide the quickest and most substantial benefits since we were basically compressing a year’s worth of activity into six months. This strategy strengthens our confidence in the comments we made in our prepared remarks. Looking back at the last 20 quarters, we have generally met or exceeded expectations, and I see several opportunities for us to continue doing so in 2026. A significant part of this will involve realizing synergies from the opportunities we closed in late Q3 and early Q4. We will keep delivering on these synergies, which I believe will help us exceed expectations in 2026, especially alongside a strong pipeline for that year. We'll provide you with substantial updates as we report Q1 and throughout the rest of the year as we move forward.

And, Patrick, if I may, just to put a finer point on that. So typically, in year 1 you worked 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 EBITDA growth that you have baked into the numbers unless I'm missing something about the nature of the deals, which is normal?

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 3 or 4 years, a large part of that is being driven by that synergy capture as you've articulated. So if you think about the 2026 guide, 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 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. So you're absolutely right. Typically, if you're going to pay, I think, Investor Day, we said we pay sort of 8x 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 '25. You saw that in '24. And certainly, for us to be able to have a 26% 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 '26, certainly contributing in there is the synergy capture from the acquisitions that you completed in '25 and previously.

Our next question comes from Tobey Sommer with Truist.

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?

Yes, it's Luke here speaking in relation to GFL. On the macro side, some indices like PMI or PPI are beginning to show positive signs or green shoots. Engaging with some of our larger customers about their capital plans for 2026, it's evident that many shelved their expansion plans in 2025 as they waited to see how things would unfold. However, discussions today indicate that companies are finding ways to navigate this uncertainty and are planning to invest in capital expenditures that could generate volume for us. Additionally, we've noticed some unexpected special waste activity in Q4 from certain markets, which wasn't initially anticipated. This is a leading indicator of future activity. While we hope to see more positive signs before getting too optimistic, it's encouraging to see these indicators suggesting that there might be opportunities ahead.

That's helpful. Regarding the move of the headquarters to the U.S. and the inclusion in various indexes, could you provide some details on the timeline? Are there any challenges or decisions you need to consider to pursue these inclusions?

Yes, right from the start, due to the changes that have taken place, we become eligible for the Russell set of indices. Typically, this process is evaluated around mid-spring, in April, and we believe we will meet the criteria for inclusion. The actual inclusion would take place in the middle of the year, likely in June. Just looking at it, the Russell Index inclusion alone could result in a mid-single-digit increase in our float, creating additional permanent demand. The next step would be becoming eligible for other U.S.-based indices, such as the CRSP, which we believe we qualify for, along with the S&P 400/500. To achieve this, we need to transition to U.S. GAAP and no longer be a foreign private issuer. We are currently working on meeting these requirements, which will open up further index demand. Index specialists indicate that there's potential for an additional 10% to 15% demand for our float from this source. When comparing the passive demand for GFL stock against our peers, there's a notable gap, and the headquarters announcement is a step towards bridging that gap. We anticipate significant incremental demand in the short to medium term, and we will continue to actively pursue that. As Patrick mentioned, one of the advantages of our current strategy, thanks to recent changes to S&P definitions, is that none of these changes hinder our potential inclusion or eligibility for the TSX 60, which would further increase asset demand. We believe we have a positive outlook for short, medium, and long-term growth that will drive significant permanent demand for a large portion of our float.

Our next question comes from James Schumm with TD Cowen.

So Luke, I just want to clarify the pricing. Pricing was 6.4% in the fourth quarter, and I believe you mentioned that Q1 is in the mid-4s or 6s. You also mentioned that you're largely 80% contracted through the year as of Q1. Can you help me understand how you expect to move from 6.4% to the mid-5s or solidly in the 6% range?

Yes. Jim, thanks for the question. It's a good one. I know sometimes the pricing map can get a little confusing, but it's really a function of the quarter over the prior year quarter. And during a period of ramping pricing during the year, effectively, the pricing actions I did in H2 '25, I now have certainty of those rolling over into H1 of '26. And therefore, just gives me a high degree of certainty of the actual dollars of price that will be realized into these quarters. So if you think about a Q1 number being in the sort of mid-6s and if that then steps down and forgive me, I don't have the rest of the quarter 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. So that's the sort of rough cadence of it. That is absent any incremental pricing actions. That's what to 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 right? The pricing you ultimately realize is a function of stick rate, and so you do pricing actions sometimes have roll backs that you need to do to establish the soda firm level pricing. And obviously, the full extent of those aren't known to us today. We're taking estimate based on our past experience. but that is the basis on which the math would yield that sort of mid-5 number.

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 going to ask, do you have plans to report in U.S. dollars. It sounds like you said maybe you've got something in the works, but what would be the timing on that?

Yes, 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 it just adds incremental complexity to the comparability. So I think the eventual outcome is that we convert to being a U.S. GAAP reporter again, eliminating diversion and reporting between us and our peers. And you could evaluate being a U.S. dollar-denominated sort of reporter as well. I mean, more and more, our business has grown in the U.S. However, we still have a very sizable business in Canada and the sort of back-end 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 U.S. GAAP filer, it may make sense at that time that you also went to a U.S. dollar currency, just to fully align comparability amongst the sort of peer group. The timing for that, Jim, I'd tell you is as of speaking about the Russell, we think there's a path where being a sort of Russell inclusion midway through this year. The next big inclusions would require a U.S. GAAP conversion. And I think we intend to be ready to do that as early as Jan 1, 2027. Now whether or not we actually sort of go forward at that date or you wait to the end of the year is still sort of TBD, 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. I could see a potential outcome be do it at the end of 2027 in advance of 2028. But certainly, we're exploring all options.

Our next question comes from Stephanie Moore with Jefferies.

Great. Luke, I just wanted to follow up on a question, maybe 2 or 3 questions ago, we were talking about the outsized margin expansion this year outside of price cost spread. I think Luke you did a really good job at the Analyst Day of outlining kind of all the self-help initiatives, ancillary pricing, automation and the like. That you expected over the next couple of years. Can 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? And I guess as a follow-up to that, if we do expect to see a 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?

Yes. 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 had articulated based on how successful we were in '25. Look, if you think about the leverage starting with the pricing, I mean, obviously, we started '25 in an expectation of low to mid-5s pricing, ended the year at 6.1, nearly 70 bps of outperformance. 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 million to $80 million prize there, taking that at this sort of midpoint roughly the $60 million amount that I mean, I think we're set up and on pace to recognize that ratably over the 4-year period, arguably a little front-end loaded as we've demonstrated in '25. As I said in the prepared remarks, pricing for 2026, estimated in the sort of mid-5s range. And any further accelerated implementation of the ancillary search charges could give upside to that number. So we're feeling really good on that aspect or that's what a 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. And I think you're seeing that as well. I mean across the cost category lines this year from direct labor costs, R&M expense, to SG&A. You're seeing the operating leverage come and part of that is that improved labor turnover. 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. The fleet conversion and CNG initiative has been a key focus for us. When we began, we had about 15 to 20 percent of our fleet operating on CNG, and we've since increased that to the mid-20s. We are now aiming to approach 30 percent, and we're already seeing positive results from this change. We feel confident about realizing the benefits that were previously highlighted. Additionally, we've made strides in overall procurement and operational efficiency, which are also yielding favorable outcomes. What gives us optimism is that we aren't depending solely on any one of these strategies for exceptional results. Instead, it's the combined effect of all these efforts, each contributing in small ways, leading to a distinct margin expansion compared to others in our sector. Looking ahead to 2026, we are excited about our potential to continue performing well. We see opportunities for growth in our forecasts, and outstanding performance across these initiatives will play a significant role. The year 2025 was a solid starting point, and we aim to maintain that momentum.

Our last question comes from Adam Bubes with Goldman Sachs.

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.

Yes, I think you could potentially spend between $1.5 billion and $2 billion. Temporarily, leverage might reach around $3.75 billion to $3.8 billion during the quarter, but you would still end the year in the mid-3s. That's likely the peak before needing some form of equity. We indicated in Q4 and late Q3 that this year might be significant for us. However, we are still evaluating many of these opportunities, so nothing is guaranteed. Your calculations are correct, depending on the purchase price for what you're acquiring, but within that range, you’re right. I believe you would still end up in the low to mid-3s, even with that capital deployment.

And Adam, 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 I think, guidance obviously embeds decelerating margin expansion throughout the year? Yes, Adam, great question. If you think about 60 basis points margin expansion on the headline number included therein, you got a 25 basis point headwind from commodities, 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 is no natural disasters. But in 2025, we enjoyed excess volume at a high margin. So back in that under bps. I think have a 10 basis point headwind from FX and some of the carbon credits that you realized in '25. So when you think about the 60 basis point headline number, backing out those amounts, yields about 100 basis points sort of underlying piece overall. 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. 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 spans 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. But that's the basis for the expectation of the cadence throughout the year. You also have Adam recall, the commodity comp will bigger drag in the first half of the year and then that steps down 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.

Our last question comes from Aadit Shrestha with Stifel.

Just a quick one. In terms of the reported volume of 50 bps for 2025, how much of that was from EPR and RNG ramping up?

RNG had a de minimis component to the overall thing because RNG is much less a revenue story for us. There's a little bit in there from R&D 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, I think the numbers we would have reported was EPR was about $10 million in Q1, roughly $20 million of 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 million or $7 million in Q4. 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, again, just going back to some of our market selection where we enjoy volumetric growth is based on the macro that's happening in Central Florida, Georgia and some of our Texas markets to help sort of offset some of the C&D related exposure.

In terms of your volume guidance for next year, what are you incorporating regarding the recovery you've observed? You mentioned some positive indicators. Are you considering including any anticipated volume increases, or is your guidance strictly based on the current situation?

No. Our guide is based on the environment that we see today. So we just assume sort of status quo. The green shoot sort of commentary was more, as I was alluding to some of these conversations and touch points we've had with our customers. Look, January is going to be a tough volume month right at 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, but this has been an exceptional level of snow. So I think you've got a pretty tough start to the year in January. But again, it's just sort of structurally of some of the contracts we've won, EPR coming online and the like that gives us sort of confidence or to print 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.

Thank you, everyone, for joining. Much appreciated. We look forward to catching up when we report Q1. Thank you.

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