Snapshot
Republic Services, Inc. reported $4.11B of revenue in Q1 2026, up 2.6% year over year, with diluted EPS of $1.70 and an operating margin of 20.2%.
- Revenue
- $4.11B
- YoY growth
- +2.6%
- Diluted EPS
- $1.70
- Operating margin
- 20.2%
What management said
- •Our SEC filings, earnings press release, which includes GAAP reconciliation tables and a discussion of business activities, along with a recording of this call, are available on our website at republicservices.com.
- •We are pleased with our first quarter results, which position us well to achieve the full year guidance that we provided in February.
- •We continue to secure new growth opportunities by leveraging our differentiating capabilities, customer zeal, digital, and sustainability.
- •First quarter organic revenue growth was driven by solid pricing across the business.
- •Average yield on related revenue was 4.1%, and average yield on total revenue was 3.4%.
- •Organic volume decreased related revenue by 1% or total revenue by 80 basis points.
- •Importantly, we delivered year-over-year revenue growth in the temporary large container business this quarter for the first time in over two years.
- •Organic revenue in the environmental solutions business decreased total revenue by 1.3% in the first quarter, which was in line with our expectations.
- •Our environmental solution sales pipeline continues to build with increased activity across multiple end markets.
- •We expect year-over-year revenue growth in this business in the second half of the year.
- •Over time, these capabilities are expected to drive additional growth, expand margins, and support continued operating leverage.
- •The integration of AI and advanced routing algorithms is expected to improve safety outcomes, strengthen service execution, and increase route efficiency.
What went well
- •Delivered revenue growth of 2.6%, adjusted EBITDA growth of 4.3%, adjusted EBITDA margin expansion of 50 basis points, adjusted EPS of $1.70, and $984 million of adjusted free cash flow, positioning the company to achieve full-year guidance.
- •Underlying business margin expanded 90 basis points despite headwinds from lower commodity prices, higher fuel costs, and severe weather.
- •Adjusted free cash flow increased more than 35% versus the prior year, driven by EBITDA growth and the timing of working capital and capital expenditures.
- •Volume performance improved sequentially in the landfill, large container, and small container verticals, and the temporary large container business delivered year-over-year revenue growth for the first time in over two years (sequential improvement of 500 basis points).
- •Customer retention remained high at 94%, turnover hit record lows, and the company was named to Fortune's World's Most Admired and Ethisphere's World's Most Ethical Companies lists.
What went wrong
- •Organic volume decreased related revenue by 1% and total revenue by 80 basis points, with residential volume down 5.2% driven by known contract losses (three larger residential contracts lost).
- •Severe weather negatively impacted volume performance by approximately $30 million during the quarter.
- •Environmental Solutions organic revenue decreased total revenue by 1.3% (a $44 million decline), with roughly $15 million tied to a 2025 emergency response job that did not repeat; ES adjusted EBITDA margin fell to 19.2%, below 20%.
- •The sharp increase in diesel prices in March negatively impacted EBITDA by $8 million as the fuel recovery fee lagged rising fuel expense by about one month.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Full year 2026 outlook | FY2026 | Provided in February 2026 | Reaffirmed; Q1 results position company to achieve full-year guidance | |
| Q2 total company margin | Q2 2026 | N/A | Flat to slightly down year-over-year, largely due to project-related landfill volume comps | |
| Fuel recovery | Q2 2026 | Fuel cost lagged by ~1 month in Q1 | Fuel recovery fees expected to offset higher fuel costs beginning in Q2 | |
| Acquisition investment | FY2026 | ~$1 billion (February guidance) | Expect to exceed $1 billion; over $700 million invested to date | |
| EV collection fleet | FY2026 | More than 200 EVs at end of Q1 | Exit year with more than 300 EV collection trucks | |
| RNG projects | FY2026 | Nine projects online in 2025 | Four additional RNG projects expected in 2026, bringing portfolio to 82 projects | |
| RNG contribution | FY2026 | N/A | $10 million incremental revenue and $10 million incremental EBITDA in 2026 | |
| ES revenue | Second half 2026 | N/A | Year-over-year revenue growth expected in the second half of the year | |
| Digital/AI benefit | By 2028 | N/A | At least $100 million of annual benefit by 2028 |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Revenue growth | +2.6% | Solid pricing across the business partially offset by organic volume declines and lower commodity prices |
| Adjusted EBITDA growth | +4.3% | Disciplined pricing, effective cost management, and value from ongoing investments |
| Adjusted EBITDA margin | +50 bps to 32.1% | Underlying business +90 bps and +20 bps from a favorable legal settlement, offset by -20 bps net fuel, -20 bps recycled commodity prices, and -20 bps acquisitions |
| Adjusted free cash flow | +35% to $984 million | EBITDA growth and timing of working capital and capital expenditures |
| Average yield on related revenue | 4.1% | Solid pricing including open market pricing of 8.4% and restricted pricing of 4.4% |
| Organic volume (related revenue) | -1% | Residential down 5.2% on contract losses and large container down 2.5%, partly offset by landfill MSW +1.4% and special waste +9.9% |
| Recycled commodity price | $120/ton vs $155/ton prior year | Lower recycled commodity prices, with increased polymer center volumes offsetting the revenue impact |
| ES revenue | -$44 million (-1.3% of total) | Non-repeating 2025 emergency response job (~$15 million) and softness; ES margin 19.2% |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Digital and AI investment | Deploying advanced analytics and upgrading RISE platform | Actively deploying AI-based predictive pricing; RISE enhancements focused on large container; call center digital tools optimizing 11 million annual inbound calls; targeting at least $100 million annual benefit by 2028, with pricing benefit first (some in 2026), routing scaling in 2028 | |
| Environmental Solutions recovery | Demand stabilizing, pipeline building | Sales pipeline continues to build with increased activity across multiple end markets; year-over-year revenue growth expected in the second half; found the bottom and building off it | |
| Acquisitions / capital allocation | ~$1 billion expected for the year | More than $700 million invested to date including $433 million in Q1; expect to exceed $1 billion; 90%+ recycling and waste; returned $507 million to shareholders including $314 million of repurchases | |
| Pricing discipline | Pricing ahead of cost inflation | Core price on related revenue 6.8%; using AI/dozens of variables for surgical, bespoke pricing to maximize price retention and reduce attrition | |
| Residential contract shedding | Shedding underperforming contracts | Three larger contracts lost drove residential volume down 5.2%; returns-focused, consistent across the year with slight 2H improvement and a different outlook in 2027 | |
| Plastics / Polymer Centers | Plastics broadly challenged; stable spreads | Spreads increasing in both polymer centers and Blue Polymers JV; glut of virgin PET from Asia a headwind, but Iran war rationing oil supply is helping reduce secondary plastics production | |
| Fleet electrification | More than 180 EVs at end of 2025 | More than 200 EV collection vehicles at end of Q1; targeting 300+ by year-end; San Pablo, CA first all-electric city fleet; federal incentive loss slowed rollout modestly |
Q&A summary
Can you benchmark where the $100 million annual AI/digital benefit pencils out for 2026 and how it flows over the next couple of years?
Three areas: pricing (RISE pricing), routing, and customer service. Pricing comes first with some benefit in 2026 building through 2027-2028. Routing will see little to no benefit in 2026, scaling in 2027 and really in 2028 with the largest impact. Customer service improves ratably and is the smallest of the three. AI is also being applied across back office, legal, and HR.
How do you think about Q2 given wildfire comps, fuel impacts, and M&A integration?
Margins expected to be somewhat flat to slightly down year-over-year, largely due to project-related landfill volumes; the underlying business would otherwise expand. Volume expected negative in Q2 and Q3, flipping positive in Q4, consistent with February guidance. Nothing has changed based on Q1 performance.
Is the wider spread between core price (5.7%) and average yield this quarter mix-driven?
Predominantly mix, driven by relatively better performance in the temporary large container (construction-related) business where price isn't captured on temporary units. As those units return you get incremental volume leading to permanent service, household formation, and small business formation.
What does EV collection vehicle unit profitability look like and how meaningful could EVs become?
Deployment concentrated in supportive local/state markets; trucks cost more but are cheaper to operate, and the company is beating its pro forma assumptions. Federal incentive loss under the new administration slowed rollout modestly. Focused on residential then small container; will be a meaningful portion of the buy by the end of the decade.
How much of your portfolio is indexed to CPI and what's the lag?
Of restricted contracts, just shy of 20% are linked directly to headline CPI, 35% to alternative indexes (water, sewer, trash), and about 45% are fixed rate or rate review. The lag is on average about 12 months with a look-back period.
Do you expect residential volumes to turn positive next year?
The rate of decrease will improve, but residential will probably still decline next year given the rollover effect of lost larger contracts. The company will continue to put upward pressure on price and remain returns-focused.