Republic Services: Waste starts to pass the smell test as we turn to 2027 – Investor Day Takeaways

研报英文原文证据摘录

Republic Services: Waste starts to pass the smell test as we turn to 2027 – Investor Day Takeaways

Investor Meeting Takeaways

We hosted investor meetings with Jon Vander Ark (Chief Executive Officer) and Brian

DelGhiaccio (Chief Financial Officer) of Republic Services. Note that the following gives

our interpretation of the key points highlighted in our investor meetings.

• RSG’s growth algorithm: RSG stated that its long‑term growth algorithm includes

MSD top‑line growth, driven primarily by price rather than volume. Under normal

conditions, revenue is expected to grow ~5.5-6%, consisting of roughly ~4% pricing

(i.e., ~100bps above inflation), +50-100bps of volume growth, and ~1% contribution

from M&A. This supports 30-50bps of annual margin expansion, translating to ~7%

EBITDA growth. Additional efficiencies in capital spending and working capital drive

faster FCF growth (i.e., around HSD FCF growth), while ongoing share repurchases

lift FCF/share growth into the LDD range over time.

• 1Q outperformance: RSG characterized 1Q results as better than expected,

relative to its guidance that had incorporated a modest demand environment and

reasonable pricing backdrop. Specifically, RSG emphasized that guidance reflected

prolonged weakness across manufacturing and construction, with PMI below 50 for

roughly three-four years. While not calling a recovery, RSG cited early signs of

improving activity, including increased cleanup and remediation work and modest

improvement in commercial construction (excluding data centers), which

contributed to the stronger‑than‑expected start to the year.

• 2026 guidance: RSG guided to ~20bps of reported margin expansion (at midpoint)

in 2026 but highlighted that this headline figure masks stronger underlying

performance.