Solid 2Q26; Guide Raised, As Expected

Research evidence excerpt

Solid 2Q26; Guide Raised, As Expected

IdeaMAdj. EBITDA exceeded estimates with margin in-line. Adj. EBITDA of $840M was

1% ahead of estimates, while margin of 32.8% was in line, as 70 bps of underlying

margin expansion from a favorable price/cost spread and lower cost of risk offset

60 bps of headwinds from fuel (40 bps) and commodities (20 bps). RNG

investments are ahead of schedule and will be largely completed in FY26, as

management expects better margins in FY27 with more costs being absorbed in

FY26. WCN repurchased $330M of shares in 2Q, bringing its 1H26 total to $615M

and more than $1B over the last twelve months. WCN has completed M&A with

annualized revenue of $100M YTD and expects to close another $30M in the

coming weeks. The FY26 guide increase included $50M from M&A, with $30M

rollover expected in FY27.

Revenue and adj. EBITDA guide were increased by 1% at the midpoint. Implied

revenue growth was revised up by 116 bps, or 55/38 bps ahead of MSe/Cons from a

combination of acquisition impact and commodities (~$50M acquisition, ~$50M

commodities) and better core price and fuel surcharges (~$20M, offsetting volume

decline). The adj. EBITDA guide implies a 33.2%-33.3% margin, with variability

primarily related to fuel. 2H implies a margin of 33.7%, as management sees a path

to 3Q margins above 34%, depending on fuel and commodities, while 4Q is expected

to be in line with a more normalized seasonal pattern after 4Q25 benefited by

approximately 100 bps from disposal and risk. Adj. FCF, capex, and Chiquita outlay

guidance were all left unchanged, and all three are still expected to decline next

year, which could move FCF conversion back into its healthy 48%-50% range.

We find valuation attractive at 14.5x our '27 EBITDA estimate and remain