Republic Services 10-Qquarter ended 2026-09-30
Emergency-response work in Environmental Solutions and fuel recovery accelerated growth despite weaker collection volumes.
Filed 2026-10-29 21:50 ET
Key figures · Q3 FY2026 · period ended 2026-09-30
- Revenue$4.6BYoY +8.2%QoQ +2.9%
- Operating income$921.0MYoY +10.2%QoQ +2.2%
- Net income$591.6MYoY +7.6%QoQ +4.5%
- Total assets$35.5BYoY +5.1%QoQ +1.0%
- Total debt$14.1BYoY +5.9%QoQ −0.1%
How total debt adds up Long-term debt, net of current maturities $14,007M + Notes payable and current maturities of long-term debt $48M Total debt $14,055M Lines as the filer presents them on its balance sheet.
- Shareholders' equity$12.2BYoY +3.1%QoQ +1.7%
- Tangible book value−$5.9BYoY −8.2%QoQ −0.2%
How this filing reads
- Health+0.4Nine-month operating cash flow was $3.52B, while debt-to-EBITDA was 2.6x versus a 3.75x covenant limit.
- Momentum+0.4Q3 revenue rose 8.2% and operating income 10%, while adjusted net income was broadly flat.
- Outlook−0.2Management expects at least $1.2B in 2026 acquisitions amid weaker collection volumes and moderating pricing.
Executive Summary
Republic Services earns fees collecting, recycling, treating and disposing of waste for residential, commercial, industrial and municipal customers. It is expanding its integrated waste network and complementary Environmental Solutions business through acquisitions. Q3 revenue grew 8.2%, faster than the nine-month pace, as emergency-response work, pricing and fuel recovery outweighed weaker collection volumes. The opportunity is broader environmental-services demand; the threat is that event-driven work and surcharges obscure softer underlying activity and uneven profitability.
What's Happening in the Business
Environmental Solutions drove much of the acceleration: emergency-response activity lifted Q3 growth to 22%, versus 3.6% for 9M. Collection remained the largest business, with revenue of $3.04B, up 7.2%; small-container collection contributed $1.38B, up 8.8%. However, residential municipal-contract losses and weaker construction and manufacturing activity reduced volumes.
Pricing supported growth but moderated. Average yield contributed 2.9 percentage points, versus 4.0 a year earlier; fuel-recovery fees added another 1.8 points, while volume subtracted 0.6 points. Growth therefore did not signal a broad recovery in waste volumes.
Republic spent $1.12B on acquisitions during 9M, including integrated waste businesses in Kansas and Utah and a Texas hazardous-waste thermal-treatment business. Management expects at least $1.2B of acquisition investment for 2026. These purchases extend collection, disposal and treatment capabilities, but preliminary allocations added $617M of goodwill and $198M of other intangible assets.
Key Financial Highlights
| Metric | Q3 2026; Y/Y | 9M 2026; Y/Y | Investor interpretation |
|---|---|---|---|
| Revenue | $4.56B; +8.2% | $13.1B; +5.2% | Emergency-response work and fuel recovery accelerated growth. |
| Operating income | $921M; +10% | $2.65B; +6.0% | The quarter benefited from the absence of prior-year labor-disruption effects. |
| Net income | $592M; +7.6% | $1.68B; +5.5% | Higher interest expense restrained earnings; lower taxes supported nine-month results. |
| Adjusted net income | $595M; broadly flat | $1.69B; +2.7% | Removing specified adjustments largely eliminates Q3’s reported earnings growth. |
| Operating cash flow | — | $3.52B; +6.2% | Noncash expenses help explain cash flow exceeding earnings, despite receivables absorbing cash. |
| Operating cash flow less capital expenditures | — | $2.16B; +7.5% | Cash generation after equipment spending did not cover acquisitions plus shareholder distributions. |
| Segment | Q3 revenue; Y/Y | Q3 Adjusted EBITDA; Y/Y |
|---|---|---|
| Group 1 — primarily western United States recycling and waste | $2.09B; +9.5% | $721M; +9.4% |
| Group 2 — primarily eastern United States, Canada and other United States regions | $1.94B; +3.7% | $594M; −6.2% |
| Group 3 — Environmental Solutions | $529M; +22% | $134M; +47% |
- Segment drivers: Group 1 benefited from pricing and stronger landfill and commercial-container volumes. Group 2 faced weaker collection and construction-related disposal after prior-year Hurricane Helene recovery work, alongside labor, fuel, subcontracting and disposal cost pressure.
- Profit comparability: Q3 2025 included $56M of labor-disruption effects—customer credits and operating costs—that did not recur. Operating margin improved only 30bp to 20.2%. Segment Adjusted EBITDA excludes depreciation, depletion, amortization and other reconciliation items; depreciation, depletion and amortization rose to $494M from $459M.
- Investment effects: Nine-month equity-method investment losses increased to $158M from $72M, while renewable-energy investments generated $119M of tax benefits. These investments affect earnings through both losses and tax savings.
- Capital allocation: Nine-month repurchases including excise tax were $856M versus $599M; dividends were $577M versus $544M. Shares outstanding fell by ≈3M since year-end, so repurchases reduced the share base rather than merely offsetting issuance.
- Funding: Total debt carrying value reached $14.1B, up 3.5% since year-end. Debt-to-EBITDA was ≈2.6 times against a 3.75-times covenant limit, providing headroom despite acquisition and distribution spending exceeding internally generated cash after capital expenditures.
Risk Assessment
- Environmental liabilities: The EPA’s undiscounted West Lake Superfund remedy estimate increased to $392M from $229M; Republic cannot yet determine the final remedy or its share, leaving potential additional cash costs.
- Acquisition exposure: Goodwill of $17.3B exceeds total stockholders’ equity, including noncontrolling interests, leaving tangible equity negative and making acquisition performance consequential.
- Fuel recovery: Republic has no fuel hedges and cannot impose recovery fees on every customer, exposing margins to unrecovered diesel, vendor-surcharge and related materials costs.
- Financing: Acquisition spending and shareholder returns increase reliance on borrowing; floating-rate debt and higher refinancing costs can constrain future cash available for investment.
This 10-Q lists no risk factors of its own and refers to the annual report. The risks above come from the rest of this filing. Full list: FY2025 10-K.
What to Watch
- Environmental Solutions durability: Q3 growth far exceeded its nine-month pace; sustained revenue and profit gains would support expansion, while reversal would reveal dependence on emergency-response work.
- Collection demand and pricing: Volume is contracting and yield growth is slowing; stabilization in residential contracts and construction-related demand would strengthen growth quality.
- Acquisition integration: The newly acquired waste and thermal-treatment businesses should expand revenue and profitability; subsequent disposals or goodwill impairments would challenge that case.
- Cash discipline: Watch whether cash after capital expenditures increasingly funds acquisitions and distributions, or whether debt continues rising to bridge the gap.
Longer version: the summary of each of the report's 6 sections, written by an AI model from the same filing.
Changes since the previous 10-Q
- Watch item improved Environmental Solutions recovery
Q2 Environmental Solutions revenue fell 0.9%, EBITDA 18%; recovery depended on returning event work. → Q3 emergency-response work returned; revenue grew 22% and EBITDA rose 47%.
Figures are computed from the filing's XBRL data; the summary and scores are written by an AI model reading the filing.
Model 006 · prompt v163 · 2026-10-30 14:43:43Z