Waste Connections, Inc. Q4 FY2025 Earnings Call

Hello everyone. Thank you for joining us and welcome to the Waste Connections, Inc. Q4 2025 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, please press 1 again. I will now hand the call over to Ronald J. Mittelstaedt, President and CEO. Please go ahead, Ron.

Okay. Thank you, Operator, and good morning. I would like to welcome everyone to this conference call to discuss our fourth quarter 2025 results and our outlook for 2026. I am joined this morning by Mary Anne Whitney, our CFO, and several other members of our senior management. As noted in our earnings release, adjusted EBITDA margin expanded by 110 basis points in Q4, capping a strong year for Waste Connections, Inc. driven by price-led organic growth, solid waste, and continued operating improvements. For full year 2025, we delivered an industry-leading adjusted EBITDA margin of 33%, up 100 basis points year over year, excluding lower commodities. We also completed approximately $330,000,000 of acquired annualized revenue, and returned over $830,000,000 to shareholders through share repurchases and dividends, while preserving flexibility for continued growth and return of capital. Before we get into much more detail, let me turn the call over to Mary Anne for our forward-looking disclaimer and other housekeeping items.

Thank you, Ron, and good morning. The discussion during today's call includes forward-looking statements made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including forward-looking information within the meaning of applicable Canadian securities laws. Actual results could differ materially from those made in such forward-looking statements due to various risks and uncertainties. Factors that could cause actual results to differ are discussed both in the cautionary statement included in our February 11 earnings release and in greater detail in Waste Connections, Inc.’s filings with the U.S. Securities and Exchange Commission and the securities commissions or similar regulatory authorities in Canada. You should not place undue reliance on forward-looking statements, as there may be additional risks of which we are not presently aware or that we currently believe are immaterial that could have an adverse impact on our business. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change after today's date. On the call, we will discuss non-GAAP measures such as adjusted EBITDA, adjusted net income attributable to Waste Connections, Inc. on both a dollar basis and per diluted share, and adjusted free cash flow. Please refer to our earnings releases for a reconciliation of such non-GAAP measures to the most comparable GAAP measures. Management uses certain non-GAAP to evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate these non-GAAP measures differently. I will now turn the call back over to Ron.

Okay. Thank you, Mary Anne. We are extremely proud of our accomplishments in 2025, led by disciplined execution to deliver better-than-expected operating and financial results. For the third consecutive year, employee turnover and safety incident rates declined, exiting 2025 at multiyear lows. In fact, building on a well-established track record for better-than-industry-average performance, in 2025, we reached historic company record levels in safety, our most important and impactful operating value. Moreover, that momentum has continued into January, when safety-related incidents were down almost 20% year over year to another record low. Additionally, we saw multiyear improvement in employee retention to achieve our 2025 targeted voluntary turnover level of 10%, and we are continuing to raise or, in this case, lower the bar as we see momentum for continued gains. As expected, these ongoing improvements have driven cost savings, productivity gains, and improved customer service. As we had indicated would be the case, we are realizing related reductions in operating costs throughout the P&L, most notably in labor, repairs, and maintenance, and most recently, risk management. Moreover, we have seen incremental benefits from pricing retention as a result of enhanced employee retention and customer satisfaction. In fact, solid waste core pricing of 6.5% in 2025 exceeded our original expectations for the full year, further expanding an outsized price-cost spread and contributing to underlying margin expansion of 100 basis points in solid waste. This outperformance enabled us to overcome incremental pressure on reported margins related to a second consecutive year of declines in value for recycled commodities and renewable energy credits associated with landfill gas sales, as well as continued sluggishness in underlying solid waste volumes. Not only did we report our expected adjusted EBITDA margin expansion to an industry-leading 33%, but we did so in spite of recycled commodity values at multiyear lows and without contribution from operations at Chiquita Canyon Landfill, which we closed at the end of 2024. On the subject of Chiquita and the closure-related outlays, we continue to make progress on managing the elevated temperature landfill, or ETLF, event. The technical aspects of that process are moving forward largely as expected, subject to some timing differences on outlays as we have made better-than-expected progress in some areas. On the other hand, the political challenges of resolving this situation continue to exceed our updated expectations primarily because of related regulatory, permitting, legal, consulting, and other unanticipated requirements that have dragged out and inflated an already burdensome and dysfunctional process. As we have indicated previously, to address these regulatory challenges, we have sought out and welcome the involvement of the U.S. EPA and constructive efforts to streamline processes, remove regulatory impediments, and enable a more effective and efficient response. We are encouraged by recent meetings with top officials at the U.S. EPA about their further engagement at the site. U.S. EPA has indicated they are finalizing next steps to support short- and long-term solutions to assist Chiquita in further mitigating and managing the reaction and streamlining the regulatory oversight at the landfill. Moving next to acquisitions. During 2025, we closed approximately $330,000,000 in annualized revenue from 19 acquisitions, ranging from West Coast franchises to competitive markets, including integrated businesses, new market entries, and a number of tuck-ins to existing operations. Our expected 2026 rollover revenue contribution of approximately $125,000,000 reflects a few additional deals already completed this year and is expected to grow with our active pipeline. As always, we remain selective about the markets we enter and disciplined about the amounts we pay. We would consider any additional deals as upside to our full-year 2026 outlook. Our focus has been and will continue to be solid waste, and we look forward to building on a model that has consistently delivered value creation. Following multiple years of outsized acquisition activity, we remain well positioned for future growth. With leverage of 2.75x debt to EBITDA, our strong balance sheet and free cash flow generation allow for continued investment in acquisitions, along with other opportunities, including growing shareholder returns. To that end, during 2025, we increased our quarterly per share dividend by 11.1% to return a record amount to shareholders, including over $330,000,000 in dividends, and over $500,000,000 in share repurchases. We have taken an opportunistic approach to share buybacks and intend to continue to do so. We recognize that market sentiment and capital flows may shift over time; that does not change the fundamentals of our business or the durability of our model, which makes buybacks compelling in the current environment. Additionally, we are reinvesting in the business and positioning ourselves for further growth and value creation through both sustainability-related projects and artificial intelligence, or AI, technology-driven initiatives. Looking first at sustainability, we continue to make progress developing our portfolio of renewable gas, or RNG, facilities, including five already online, with the remainder expected to be operational around year-end. We have also broken ground on an additional state-of-the-art recycling facility expected online in 2027. Looking next to AI and our multiyear rollout, which began in 2025, these investments are aimed at enhancing efficiency and boosting productivity by further digitizing and automating our operations and improving forecasting through data analytics. At the same time, we are focused on service and customer experience for improved transparency and mobile connectivity. What is exciting is that we are just getting started. We are already seeing positive outcomes as we expand the utilization of AI and data analytics across multiple platforms. For instance, we have enhanced our dynamic routing platform to further optimize asset utilization performance. Promising early indications show direct and indirect benefits beyond cost reductions ranging from improvements in safety and employee engagement to enhanced customer satisfaction and retention. We are excited to build upon these efforts as we deploy additional applications and expand our development in 2026 and 2027. I will now turn the call over to Mary Anne to review more in-depth the financial highlights of the fourth quarter, as well as provide a detailed outlook for the full year 2026. I will then wrap up before heading into Q&A.

Thank you, Ron. In the fourth quarter, we delivered revenue of $2,373,000,000. Acquisitions completed since the year-ago period contributed about $58,000,000 of revenue in Q4, net of divestitures, bringing full-year net acquisition contribution to $377,000,000. Q4 pricing accelerated sequentially to 6.4% and ranged from about 3.7% in our mostly exclusive market Western region to over 7% in our competitive markets. Reported volume down 2.7% was in line with prior quarters and continued to reflect the combined impact of intentional shedding, price-volume trade-off, and ongoing weakness in the more cyclically driven elements of the business. Looking at year-over-year results in the fourth quarter on a same-store basis, roll-off pulls were down 2%, and total landfill tons were up 3%. On MSW and special waste both up 4%, while construction and demolition debris, or C&D, was down 4%. For the full year, C&D tons were down 5% year over year, bringing tons down about 15% from 2023. Special waste, on the other hand, was up 7% for the full year 2025 following declines in two of the last three years. And finally, full year 2025 MSW tons were up 3%, in part as a result of our purposeful increase in internalization in the Northeast and in certain Texas markets. We are encouraged by the consistency of results in 2025 and macro indicators that suggest improving underlying dynamics in the broader economy, but have not factored in a material pickup in our expectations for 2026. Adjusted EBITDA for Q4, as reconciled in our earnings release, was up 8.7% year over year to $796,000,000 or 33.5% of revenue, up 110 basis points year over year. In Q4, we lapped the initial wind-down of operations at Chiquita Canyon Landfill, as well as the toughest year-over-year commodity comparisons, both of which had masked the strength of underlying margin expansion on a reported basis. As anticipated, the outsized benefits from operational improvements that had been contributing all year were more visible in Q4. Along those lines, we were encouraged to see benefit from risk management costs which up until Q4 had been a headwind to reported results. Looking at the full year 2025, adjusted EBITDA of $3,125,000,000 was up 7.7% year over year, with adjusted EBITDA margin of 33%, up 50 basis points. Normalizing for Chiquita and lower commodities, the adjusted EBITDA margin exceeded 33.6%, as expected. Moving next to adjusted free cash flow. Our 2025 adjusted free cash flow of $1,260,000,000 was largely in line with our expectations and reflects underlying conversion of adjusted EBITDA of approximately 50%. Strength of our free cash flow generation largely overcame higher-than-expected cash flow impacts from Chiquita, which totaled approximately $200,000,000. Capital expenditures of $1,194,000,000 were in line with our expectations, including RNG projects spend of about $100,000,000. Our RNG spend for the projects noted will be completed in 2026, and Chiquita outlays are expected to step down, setting up higher free cash flow conversion which has been factored into our 2026 outlook, which I will now review. Before I do, we would like to remind everyone once again that actual results may vary significantly based on risks and uncertainties outlined in our safe harbor statement and filings we have made with the SEC and the securities commissions or similar regulatory authorities in Canada. We encourage investors to review these factors carefully. Our outlook assumes no change in the current economic environment. Our outlook also excludes any impact from additional acquisitions that may close during the remainder of the year and expensing of transactions-related items during the period. Revenue in 2026 is estimated in the range of $9,900,000,000 to $9,950,000,000. For solid waste collection, hauling, and disposal, we expect organic growth in the range of 3.5% to 4%, driven by core pricing of 5% to 5.5%, with expected yield of approximately 4% implying volumes flat to down about half a percentage point. Acquisition revenue contribution of about $125,000,000 reflects deals closed to date. Commodity-related revenue reflects recent values, and E&P waste revenues are expected to be flattish year over year. On that basis, adjusted EBITDA in 2026, as reconciled in our earnings release, is expected in the range of $3,300,000,000 to $3,325,000,000. Adjusted EBITDA margin in the range of 33.3% to 33.4%, up 30 to 40 basis points year over year, reflects the commodity-related drag of 20 to 30 basis points. As noted, incremental acquisition activity, any improvement in the underlying economy, or increase in commodities would provide upside to our 2026 outlook. Depreciation and amortization expense in 2026 is estimated at about 13.1% of revenue, including amortization of intangibles of about $195,000,000 or $0.57 per diluted share net of taxes. Interest expense is estimated at approximately $330,000,000 and our effective tax rate for 2026 is estimated to be approximately 24.5% with some quarterly variability. Adjusted free cash flow in 2026, as reconciled in our earnings release, is expected to increase by double-digit percentages to a range of $1,400,000,000 to $1,450,000,000. CapEx estimated at $1,250,000,000 includes an aggregate of about $100,000,000 for RNG and recycling projects. And our adjusted free cash flow outlook also reflects $100,000,000 to $150,000,000 impact from closure-related outlays at Chiquita Canyon. Normalizing for both non-core impacts, 2026 adjusted free cash flow reflects conversion of approximately 50% of EBITDA or approximately $1,700,000,000. While not providing specific expectations for revenue and EBITDA by quarter, we would offer the following high-level framework.

Thank you, Mary Anne. Coming into 2025, we emphasized excellence with humility, recognizing our ongoing commitment to a proven strategy for delivering industry-leading results while acknowledging the benefits of new ideas, innovation, and technology. We are excited about our progress in 2025 and the momentum in 2026 for another year of outsized solid waste margin expansion, along with double-digit adjusted free cash flow growth. Moreover, we are positioned for upside from any pickup in the economy or commodities as well as additional acquisitions. We are excited to win from within in 2026 and are grateful for the dedication of our 25,000 employees who set us apart by putting our values into action every day. We also appreciate your time today. I will now turn this call over to the Operator to open up the lines for your questions.

Thank you, Ron. We will now begin the question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, please press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Sabahat Khan with RBC Capital Markets. Your line is open. Please go ahead.

Great. Thanks, and good morning. Maybe just starting with, Mary Anne, the free cash flow commentary that you shared.

Wondering if you can just delve a little bit more into sort of the sustainability CapEx, where that is going? And then just on the Chiquita as well, it sounds like $100 to $150. If you can just talk about the cadence of that spend, and then more importantly, as we think about free cash conversion in this year into 2027, just how should we directionally expect those two incremental amounts to evolve through 2026 and more so into 2027? Thanks. Sure. Well, at a high level, to be clear, we would expect them both to step down 2026 to 2027. So first of all, in terms of sustainability-related outlays, the $100,000,000 includes the final $75,000,000 that we have been talking about for the large slug, that dozen or so RNG facilities, which, as Ron mentioned in his remarks, almost half of which are online, the balance are expected by around year-end. So that is done there. And then the incremental $25,000,000 that we mentioned is part of our efforts longer term, as we have described, to really de-risk recycle, take advantage of the incremental technology that provides benefits as a set of de-risking, reducing our cost to third parties, and also improving the quality of the recyclables coming. So that is just, you should think of that as there is this opportunity. It is a little out slug. We are always spending a little, but it is part of the $100,000,000 this year. And, again, I would not say that repeats going forward. With respect to Chiquita Canyon outlays, as we described, some of what was the outlays in 2025 reflect getting more done than we had anticipated. So there is some of that that continues to decrease as we move through that process. And then there are other pieces that we had not expected, the pace or the type of outlays that we are seeing. And so we certainly, when you say the cadence during the year, I would not put too much premium on how quickly those outlays are, just as you know CapEx and free cash flow in general is always lumpy during the course of the year. So I would encourage you to just think about it in totality for 2026. Great. Thanks for that. And then maybe just stepping back on the broader guidance. I think the commentary indicates not a lot of, you know, not a lot of aggressive assumptions at least on the macro and the commodity prices. Maybe you can just share some thoughts around sort of what you baked in terms of the macro environment. You know, we are hearing some commentary on some of the sector calls around green shoots. If you can just comment on where you see potential sources of upside, whether that is on maybe the cyclical volumes getting a little bit better, whether that is maybe another above-average year of M&A. Just what have you baked in, and where do you think upside could come from if there is for the rest of the year? Thanks. Sure. So as we have said, I mean, I would say there are three key things that we have not baked in. One is any improvement in commodity values. And so you see that headwind over the course of the year, which, as I noted in terms of quarterly cadence, is strongest. So the largest headwinds are a lot like Q4 when it was 40 basis points headwind. That is how to think about the first half of the year, and then those abate just as comps get easier. So to the extent that there is any pickup in commodity values, you would see a benefit there. Next, you heard us talk about, you know, with yield of about 4% that volumes are kind of in that flat to down half a point. That is not materially different from what we have been seeing in terms of that piece of the business that is the more cyclically exposed where you have had lower roll-off and C&D tons. And so to the extent that those improve or that there is incremental improvement in special waste, which we described being up year over year, that would be incremental. And we certainly agree with the characterization that others have made about green shoots in the economy, you know, from certain macro indicators. You know, we would point to, within our business, seeing the special waste pipeline firming. I would note that Q4 is our fifth consecutive quarter of improvement. And I look at the recent trends just in January and weekly trends. I continue to see those up in the most recent weeks. Next, commercial service increases are outpacing decreases with overall net new business up. That is encouraging. And while C&D is still down over the year, we have seen the declines moderating. You look back earlier in the year in Q2, we were down about 9% year over year, and we exited the year down more like 3.5% to 4%. So no improvement overall is factored in there. And then the final piece you asked about was M&A, and I will turn it to Ron. But, of course, as is our approach, we do not bake expected M&A into our outlook. What we have provided you are deals that have already closed.

Yeah. And, Sabahat, I would say that, you know, when we, at the third quarter call, I think we had reported that we had closed about $250,000,000 by then, that we expected to close some $75,000,000 to $100,000,000 thereabouts. You see we closed about another $80,000,000. That brought that number to $330. In fact, today, we have closed, and last week, closed about another $20,000,000 of that. So that brings you right to that $100,000,000 that we talked about that was out there that could occur during the fourth quarter or the very beginning of the year. So that has occurred. So there is no real change to M&A. As Mary Anne said, look. You know, I know you have not followed the space forever, Sabahat, but if you go back, there is a pattern by multiple companies within the space that tend to go out and put out guidance at the beginning of the year and make all kinds of improvement assumptions in the economy and then come back around in the third quarter or the fourth and back all those off. We do not believe that is a prudent way of providing guidance. We are providing guidance with what is known today assuming it does not improve, and if it does improve, it will be upside. So we just think that is a more conservative approach. Not saying there is anything wrong with the other approach, but this is a very consistent pattern for us, and actually for others in the space taking the approach they have.

Great. Thanks so much for the color.

Hi. Good morning. Thank you so much. I think your pricing is moderating versus last year as some of the cost pressures are also waning. I was curious, could you elaborate on which buckets of expenses you are seeing moderation in and you believe are sustainably trending downward for the next few years?

Yeah. Tami, I mean, number one, you are correct. Price is moderating, and that is a good thing. We are happy about that. Remember, we do not always focus on the ultimate amount of the dollar amount or percentage of the price increase. We try to focus on maintaining the spread of, you know, 150 to 200 basis points spread to what we believe our cost is going up. So if you look at our guidance for price, core price of that 5% to 5.5% and say that is 100 basis points down from 2025, it would indicate to you that we believe our cost is down about 100 basis points relative to 2025 on an increased basis, and it is. You know, we began 2025 with labor rates approaching 5% year over year, and we exit Q4 with labor rates up about 3.9% year over year, and trending down towards 3% to 3.5% throughout 2026. We had other costs within the P&L in 2025 that began the year probably closer to 4.5% and moved throughout the year closer to up more in that 2.5% to 3%. So it is just about the spread. We look forward to not having to put as much dollar amount or percentage rate increase on our customers. They are feeling the same effects from the economy as everyone else. But if the spread has maintained the same, or approximately the same, then that is what we focus on.

Understood. That is very helpful. And I think we love hearing about all the tech and AI investments you are making to improve the efficiency in your business. Any exciting initiatives you want to call out specifically that are due for implementation this year that we can look forward to?

Well, yes, there are. And, you know, we are actually excited about them too. Whoever thought in an old-line industrial waste company that, you know, we would understand what AI even was. But this year, we are focused heavily on two incremental initiatives of seven that we have agreed to do between 2025–2027. This year’s two are moving the company into more of a dynamic, real-time customer routing opportunity. We have very good routing today, but it is what I call static. It has no ability to read incoming data. So you run the route sort of the night before or the week before. Where we are moving to is sort of a real-time routing that takes into effect things just like I have said on another call would be like Waze for your car. It takes in road closures. It takes in traffic conditions. It takes in third-party data feeds to allow us to react real time and resequence with the utilization of AI doing the resequencing, not somebody doing it in another way. So that is one. And the second one is we are developing a dramatically more robust mobile connectivity platform and working towards trying to eliminate inbound calls to our customer service groups locally by as much as, you know, 30% to 50% over a multiyear period. You know, we take over 1,500,000 calls from customers per month right now. And our objective is to get that down somewhere between, you know, 700,000 and 1,000,000 over the next couple of years by being able to push out information mobily to customers for the five to six most common things. We know what the five to six most common things customers are asking, and it is mostly because they are not receiving that information in real time, such as, you know, I think your driver did not pick me up today because he usually picks me up between 7 and 8 a.m., and in reality, he is going to pick them up that day, but the road has been closed due to snow. And so we are able to push out. They are able to see when their driver will arrive and where their driver is on their route, much like you do with your Uber if you order an Uber today. You know where they are and how far away they are. Those kinds of things are dramatic changes in efficiency and service quality for us. So those are two things that we are working to bring online in 2026.

Very exciting. Thank you.

Hey. Good morning. Thanks for taking the questions. You know, Ron, in years past on M&A, you have talked about potential for an out year. How do you assess, based on the pipeline, the potential coming into this year? And then on the same subject of capital allocation, you said you will be opportunistic with the buybacks, but just given where the stock price and the valuation sit today, how opportunistic are you being here to start the year?

Well, let us tackle the first part of that, which was your M&A question. Look. As you know, M&A can be lumpy. We have had three very strong years in a row. No reason to expect that 2026 looks any different. There is nothing that has changed in the underlying opportunity basket. Nothing has changed in our appetite to complete deals or our ability to complete deals or our financial flexibility. So, you know, I think it is very fair that you and others, we should expect, you know, another sort of out year. Now how much of an outsized relative to a normal $150,000,000 to $200,000,000 year? You know, the year needs to play out to see that. But I think, hopefully, you look back at the last three years’ track record and we are not seeing something that would make us think that this year looks different. And we certainly have the capacity, as we said in our script, to do both whatever comes along at M&A and as much buyback and, you know, return of capital as we think is prudent based on the fundamentals of our business and what is driving those opportunities in the buyback. So we do not see any limitations on any of those. As far as, you know, every now and then, you pointed out that a larger deal comes along. And, you know, we looked at several things that we did not pursue or were not successful on in 2025, and we had one of those in 2024, had one of those in 2023. I mean, certainly, there is a good chance that happens in 2026. But we do not bank on any of that or forecast any of that, because that just leads to overpaying and pushing to do something that you might not otherwise have done. So we continue to look at everything and be very active. But we are going to continue to be very disciplined in our approach to what we think is a quality asset for, you know, long-term value creation.

Great. Thanks so much for the color.

Your next question comes from the line of Tami Zakaria with JPMorgan. Your line is open. Please go ahead.

Hi. Good morning. Thank you so much. I think your pricing is moderating versus last year as some of the cost pressures are also waning. I was curious, could you elaborate on which buckets of expenses you are seeing moderation in and you believe are sustainably trending downward for the next few years?

Yeah. Tami, I mean, number one, you are correct. Price is moderating, and that is a good thing. We are happy about that. Remember, we do not always focus on the ultimate amount of the dollar amount or percentage of the price increase. We try to focus on maintaining the spread of, you know, 150 to 200 basis points spread to what we believe our cost is going up. So if you look at our guidance for price, core price of that 5% to 5.5% and say that is 100 basis points down from 2025, it would indicate to you that we believe our cost is down about 100 basis points relative to 2025 on an increased basis, and it is.

Understood. That is very helpful. And I think we love hearing about all the tech and AI investments you are making to improve the efficiency in your business. Any exciting initiatives you want to call out specifically that are due for implementation this year that we can look forward to?

Well, yes, there are. And, you know, we are actually excited about them too. Whoever thought in an old-line industrial waste company that, you know, we would understand what AI even was. But this year, we are focused heavily on two incremental initiatives of seven that we have agreed to do between 2025–2027. This year’s two are moving the company into more of a dynamic, real-time customer routing opportunity.

Very exciting. Thank you.

Hey. Good morning. Thanks for taking the questions. You know, Ron, in years past on M&A, you have talked about potential for an out year. How do you assess, based on the pipeline, the potential coming into this year? And then on the same subject of capital allocation, you said you will be opportunistic with the buybacks, but just given where the stock price and the valuation sit today, how opportunistic are you being here to start the year?

Well, let us tackle the first part of that, which was your M&A question. Look. As you know, M&A can be lumpy. We have had three very strong years in a row. No reason to expect that 2026 looks any different. There is nothing that has changed in the underlying opportunity basket. Nothing has changed in our appetite to complete deals or our ability to complete deals or our financial flexibility. So, you know, I think it is very fair that you and others, we should expect, you know, another sort of out year. Now how much of an outsized relative to a normal $150,000,000 to $200,000,000 year? You know, the year needs to play out to see that.

Great. Thanks so much for the color.

Your next question comes from the line of Tami Zakaria with JPMorgan. Your line is open. Please go ahead.

Hi. Good morning. Thank you so much. I think your pricing is moderating versus last year as some of the cost pressures are also waning. I was curious, could you elaborate on which buckets of expenses you are seeing moderation in and you believe are sustainably trending downward for the next few years?

Yeah. Tami, I mean, number one, you are correct. Price is moderating, and that is a good thing.

Understood. That is very helpful. And I think we love hearing about all the tech and AI investments you are making to improve the efficiency in your business.

Well, yes, there are. And, you know, we are actually excited about them too. Whoever thought in an old-line industrial waste company that, you know, we would understand what AI even was. But this year, we are focused heavily on two incremental initiatives of seven that we have agreed to do between 2025–2027.

Very exciting. Thank you.

Hey. Good morning. Thanks for taking the questions. You know, Ron, in years past on M&A, you have talked about potential for an out year. How do you assess, based on the pipeline, the potential coming into this year? And then on the same subject of capital allocation, you said you will be opportunistic with the buybacks, but just given where the stock price and the valuation sit today, how opportunistic are you being here to start the year?

Well, let us tackle the first part of that, which was your M&A question. Look. As you know, M&A can be lumpy. We have had three very strong years in a row. No reason to expect that 2026 looks any different. There is nothing that has changed in the underlying opportunity basket. Nothing has changed in our appetite to complete deals or our ability to complete deals or our financial flexibility. So, you know, I think it is very fair that you and others, we should expect, you know, another sort of out year. Now how much of an outsized relative to a normal $150,000,000 to $200,000,000 year? You know, the year needs to play out to see that.

Great. Thanks so much for the color.

Your next question comes from the line of Tami Zakaria with JPMorgan. Your line is open. Please go ahead.

Hi. Good morning. Thank you so much. I think your pricing is moderating versus last year as some of the cost pressures are also waning. I was curious, could you elaborate on which buckets of expenses you are seeing moderation in and you believe are sustainably trending downward for the next few years?

Yeah. Tami, I mean, number one, you are correct. Price is moderating, and that is a good thing.

Understood. That is very helpful. And I think we love hearing about all the tech and AI investments you are making to improve the efficiency in your business.

Well, yes, there are. And, you know, we are actually excited about them too. Whoever thought in an old-line industrial waste company that, you know, we would understand what AI even was. But this year, we are focused heavily on two incremental initiatives of seven that we have agreed to do between 2025–2027.

Very exciting. Thank you.

Hey. Good morning. Thanks for taking the questions.

Well, let us tackle the first part of that, which was your M&A question. Look. As you know, M&A can be lumpy. We have had three very strong years in a row. Great. Thanks, and good morning. Maybe just starting with, Mary Anne, the free cash flow commentary that you shared.

Wondering if you can just delve a little bit more into sort of the sustainability CapEx, where that is going? I will now turn the call back over to Ron.