Waste management company Republic Services (NYSE: RSG) missed Wall Street’s revenue expectations in Q3 CY2025 as sales rose 3.3% year on year to $4.21 billion. Its non-GAAP profit of $1.90 per share was 6.5% above analysts’ consensus estimates.
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Republic Services (RSG) Q3 CY2025 Highlights:
- Revenue: $4.21 billion vs analyst estimates of $4.24 billion (3.3% year-on-year growth, 0.8% miss)
- Adjusted EPS: $1.90 vs analyst estimates of $1.78 (6.5% beat)
- Adjusted EBITDA: $1.38 billion vs analyst estimates of $1.35 billion (32.8% margin, 2.4% beat)
- Operating Margin: 19.9%, in line with the same quarter last year
- Sales Volumes were flat year on year, in line with the same quarter last year
- Market Capitalization: $65.54 billion
StockStory’s Take
Republic Services’ third quarter results were met with a negative market reaction as revenue growth fell short of Wall Street expectations, with management citing continued softness in construction and manufacturing end markets as a key drag on volumes. CEO Jon Vander Ark pointed to strong pricing and disciplined operational execution as drivers of margin expansion, despite flat sales volumes and persistent headwinds in the Environmental Solutions business. Vander Ark stated, “Continued investment in our differentiated capabilities positions us well to drive sustainable growth and enhance long-term shareholder value.”
Looking ahead, Republic Services’ management is focused on maintaining price discipline, expanding its portfolio through acquisitions, and scaling sustainability investments in areas such as plastics recycling and renewable natural gas. Vander Ark emphasized, “Our initial perspective regarding 2026 is the long-term growth algorithm is intact,” but acknowledged that non-recurring event-driven landfill volumes in 2025 would create a tougher comparison next year. The company also expects macroeconomic factors, such as commodity pricing and sluggish manufacturing activity, to shape near-term performance while they pursue growth opportunities in core and adjacent markets.
Key Insights from Management’s Remarks
Management attributed the quarter’s margin gains to strong pricing and operational efficiency, while noting that revenue was pressured by volume declines and Environmental Solutions headwinds.
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Pricing strength supported margins: Republic Services achieved higher average yields across its business, with core price increases outpacing cost inflation. CFO Brian DelGhiaccio reported open market pricing growth of 8.6%, supporting margin resilience even as underlying volumes remained flat.
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Environmental Solutions underperformed: The Environmental Solutions segment faced revenue and EBITDA pressure due to weak manufacturing activity, lower event-driven landfill volumes, and fewer emergency response jobs. Vander Ark explained, “While demand stabilized exiting the third quarter, our pipeline for new business is now expanding.”
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Event-driven landfill boost offset by declines: Revenue benefited from hurricane recovery and special waste activity, particularly in the Carolinas and Sunbelt geographies, but these were offset by declines in the collection business and nonrecurring nature of such events.
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Sustainability investments progressed: The company advanced its Polymer Centers for plastics recycling, commenced operations at six renewable natural gas (RNG) projects this year, and added electric vehicles (EVs) to its fleet, underscoring ongoing sustainability initiatives.
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Active M&A pipeline: Over $1 billion was invested in strategic acquisitions year to date, with management highlighting a strong acquisition pipeline across both Recycling & Waste and Environmental Solutions. Vander Ark noted the company’s focus on small- and mid-sized deals for further expansion.
Drivers of Future Performance
Looking forward, Republic Services’ outlook is shaped by disciplined pricing, sustainability investments, and acquisition activity, but macroeconomic headwinds remain a risk.
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Pricing discipline and cost management: Management expects to maintain a price-cost spread of 75 to 100 basis points above inflation, relying on sophisticated pricing tools and customer mix optimization. Vander Ark noted the company’s focus on capturing value in segments willing to pay for quality service while remaining competitive in price-sensitive areas.
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Sustainability and innovation investments: The company aims to drive long-term growth through its Polymer Centers, Blue Polymers joint venture, and expansion of RNG facilities. While ramp-up of new facilities has taken longer than planned, management remains optimistic about future contributions to revenue and margin expansion.
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Acquisition-driven growth amid macro headwinds: Republic Services anticipates continued acquisition activity supporting both Recycling & Waste and Environmental Solutions, with a strong pipeline for 2026. However, management is cautious about the potential for ongoing softness in manufacturing and construction, as well as volatile commodity prices impacting recycling revenue.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will closely watch (1) the performance and ramp-up of new Polymer Centers and RNG projects, (2) stabilization or growth in Environmental Solutions volumes as the business pipeline expands, and (3) continued effectiveness of pricing strategies amid inflation and competitive pressures. Progress in acquisition integration and sustained margin discipline will also be important markers of execution.
Republic Services currently trades at $205.49, down from $209.89 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).
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