GFL Environmental (NYSE:GFL) executives highlighted margin expansion, pricing strength and a more flexible balance sheet as they reviewed fourth-quarter 2025 results and provided 2026 guidance on the company’s earnings call.
Founder and CEO Patrick Dovigi said 2025 results reflected the strategy the company outlined at its investor day, pointing to “relentless focus on value creation through the optimization of our existing platform.” He said GFL reached a 30% adjusted EBITDA margin for the first time in its history, which he attributed to ongoing price discovery and operational efficiencies across the portfolio.
2025 highlights: pricing, volumes and margin expansion
On volumes, Pelosi said Q4 volumes were 70 basis points ahead of plan due to “unanticipated special waste activity” in several markets, while construction and demolition (C&D) volumes remained soft. The company ended 2025 with 50 basis points of positive volume, which management said was notable given macro conditions.
Adjusted EBITDA margins continued to expand, with Q4 margin reaching 30.2%, the highest fourth-quarter margin in company history. Pelosi noted commodities were a drag on margins as market pricing decelerated further from Q3, and said Q4 commodity prices were down 33% year over year. Excluding commodities and other non-recurring factors such as prior-year hurricane volumes, he said underlying consolidated margins were up more than 150 basis points from the prior year.
For the full year, Pelosi reported adjusted EBITDA of $1.985 billion. He added that on the same FX rate used for original guidance, adjusted EBITDA would have been approximately $2.0 billion, more than $50 million above the high end of the original guide despite commodity and C&D headwinds. Adjusted free cash flow was $425 million in Q4 and $756 million for 2025, with conversion improving to 38%.
Capital allocation: divestitures, buybacks and M&A
Dovigi described 2025 as transformative for capital allocation, citing the sale of the environmental services (ES) segment and a recapitalization of GIP that simplified the company into what he called a “pure-play solid waste leader.” He said proceeds from those transactions enabled material deleveraging and significant share repurchases, along with increased M&A activity.
Management said the company repurchased over 10% of its own stock, including completion of an initial $2.25 billion buyback plan in the first half of the year and an additional $750 million of incremental buybacks in the second half due to what Dovigi called a share price dislocation. Pelosi said GFL bought back over $200 million of shares in Q4, bringing total 2025 repurchases to $3 billion.
On M&A, executives said the company deployed close to $1 billion during 2025, largely in the back half of the year, and expects a meaningful rollover benefit into 2026. The company ended 2025 with net leverage of 3.4x, the lowest year-end net leverage in its history, according to Pelosi. He noted leverage would have been 3.1x excluding the incremental $750 million of buybacks.
2026 outlook: revenue, EBITDA, free cash flow and key assumptions
Pelosi said 2026 revenue is expected to be approximately $7.0 billion, or $7.14 billion on a constant currency basis, representing 8% growth. Key components of the outlook included:
- Pricing: expected in the mid-5% range, supported by base pricing programs and incremental EPR contributions; management said further acceleration in ancillary surcharge programs could provide upside.
- Volumes: expected to be positive 25 to 50 basis points, with headwinds from hurricane-related comparisons in Q1, EPR transition impacts and certain residential contract dynamics; excluding those items, underlying volumes were expected to be closer to 100 basis points.
- M&A: expected to add roughly 250 basis points of revenue growth.
- Commodities and fuel: expected to be a 50 basis point headwind to revenue growth based on current prices, with management noting any improvement would be additive.
- FX: guidance assumes an FX rate of 1.36; management reiterated that a one-point FX change impacts revenue by about $35 million and adjusted EBITDA by about $11 million.
Adjusted EBITDA for 2026 is expected to be $2.14 billion, or $2.185 billion on a constant currency basis, a 10% increase. Pelosi said adjusted EBITDA margins are expected to expand by 60 basis points to an implied 30.6% margin, despite headwinds from lower commodity prices and FX.
Adjusted free cash flow is expected to increase to $835 million, or $860 million on a constant currency basis, up 14%. Pelosi said the guide reflects higher cash taxes than previously expected because investment tax credits associated with renewable natural gas (RNG) projects shifted into 2027; without that change, he said adjusted free cash flow growth would have been closer to 20% on a constant currency basis. The company expects net CapEx of approximately $800 million, cash interest of $395 million, and other items of $110 million. GFL also expects about $175 million of incremental growth CapEx excluded from adjusted free cash flow.
Pelosi added that the $175 million growth CapEx is “very front-end loaded,” largely reflecting EPR collection contracts and truck payments, and that RNG project contributions are more muted in 2026 as projects shift into 2027 and beyond.
Operational priorities and index inclusion efforts
Management reiterated that cost intensity continued to trend lower in 2025, citing levers such as improving labor turnover, fleet optimization and procurement benefits from scale. Pelosi said the company’s “self-help” initiatives were contributing to operating leverage across cost lines, and that the company saw additional room to improve labor turnover in 2026 and 2027.
The company also discussed efforts to increase index eligibility. Dovigi noted GFL relocated its executive headquarters to the U.S. to broaden eligibility for U.S. equity indices while preserving Canadian index eligibility. Pelosi said the move makes GFL eligible for Russell indices, with evaluation expected in the spring and potential inclusion around mid-year. He added the company is taking steps toward U.S. GAAP reporting and domestic filings, which could support eligibility for additional indices, though he said such changes are not expected in 2026 and could occur as early as Q1 2027 depending on timing.
Looking ahead, Dovigi reaffirmed a commitment to maintaining leverage in the low-to-mid 3x range while pursuing M&A opportunities. He said the company could potentially spend $1.5 billion to $2.0 billion on acquisitions and still exit the year in the mid-3s, with leverage potentially peaking temporarily intra-quarter.
On the call, management also provided first-quarter 2026 expectations, with Pelosi citing revenue of C$1.6 billion to C$1.625 billion at an approximate 28.8% margin and adjusted free cash flow of negative C$45 million due to the timing of working capital and CapEx payments.
About GFL Environmental (NYSE:GFL)
GFL Environmental Inc is a leading North American provider of diversified environmental services, offering comprehensive solutions across solid waste management, liquid waste management, soil remediation and infrastructure services. The company’s core business activities include residential, commercial and industrial waste collection, recycling, composting and landfill management. In addition to traditional waste services, GFL provides specialized liquid waste hauling, treatment and disposal services as well as environmental consulting to support industrial and municipal clients in meeting regulatory and sustainability goals.
Founded in 2007 by entrepreneur Patrick Dovigi, GFL Environmental has pursued an aggressive growth strategy driven by strategic acquisitions and organic expansion.
