Republic Services (RSG) 11th Annual Waste and Environmental Symposium summary

Business overview and strategy

• Operates primarily in recycling, waste, and environmental solutions, with a growing focus on sustainability and innovation, including decarbonization and circularity initiatives.

• Expanded into environmental solutions due to customer demand, acquiring key assets like US Ecology to strengthen hazardous waste capabilities and cross-sell opportunities.

• Achieved significant EBITDA margin expansion in environmental solutions, moving from mid-teens to mid-20s, with further room for improvement.

• Maintains a high proportion of scheduled service contracts, providing stability against short-term demand fluctuations.

• Continues to gain market share and new clients, despite cyclical softness in sectors like construction and manufacturing.

Pricing, inflation, and margin management

• Targets pricing about 100 basis points above cost inflation, aiming for 5% yield with 4% cost inflation in 2025.

• Prefers moderate inflation (3-4%) as it supports pricing power, especially for contracts tied to indices like Water, Sewer, Trash, and Garbage Trash.

• Shifted many municipal contracts from headline CPI to alternative indices or fixed increases, improving margin resilience.

• Achieved better pricing backdrop and confidence in maintaining price above cost inflation due to these changes.

Regulatory and macroeconomic environment

• Most regulation is state and local; federal changes have limited direct impact, though tax credits from the Inflation Reduction Act are beneficial but not critical.

• Potential changes in tax law, such as bonus depreciation and CNG tax credits, could provide significant cash flow upside if extended.

• Tariffs have limited direct impact but could indirectly affect costs and demand; moderate inflation from tariffs could benefit pricing.

• Manufacturing reshoring and expansion in the U.S. would directly benefit demand for both recycling and environmental solutions.