ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with our audited consolidated financial statements and the notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K. This discussion may contain forward-looking statements that anticipate results that are subject to uncertainty. We discuss in more detail various factors that could cause actual results to differ from expectations in Part I, Item 1A, Risk Factors in this Annual Report on Form 10-K.
For further discussion regarding our results of operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023, refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations , in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 .
Recent Developments
2026 Financial Guidance
In 2026, we will focus on pricing in excess of cost inflation, driving profitable volume growth, investing in sustainability to improve the environment and drive growth, investing in value-creating acquisitions and advancing technology to improve productivity and increase customer retention. Specific guidance follows:
Revenue
We expect revenue to be in the range of $17.050 billion to $17.150 billion. We expect growth from average yield on total revenue to be in a range of 3.2% to 3.7% and related revenue to be in a range of 4.0% to 4.5%. We expect the impact from volume on total revenue to be approximately (1.0)%.
Adjusted Diluted Earnings per Share
The following is a summary of anticipated adjusted diluted earnings per share for the year ending December 31, 2026 compared to the actual adjusted diluted earnings per share for the year ended December 31, 2025. Adjusted diluted earnings per share is not a measure determined in accordance with U.S. GAAP:
(Anticipated)
Year Ending December 31, 2026
(Actual)
Year Ended December 31, 2025
Diluted earnings per share
Restructuring charges
Labor disruption
Adjusted diluted earnings per share
We believe that the presentation of adjusted diluted earnings per share provides an understanding of operational activities before the financial effect of certain items. We use this measure, and believe investors will find it helpful, in understanding the ongoing performance of our operations separate from items that have a disproportionate effect on our results for a particular period. We have incurred comparable charges and costs in prior periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Our definition of adjusted diluted earnings per share may not be comparable to similarly titled measures presented by other companies.
The guidance set forth above constitutes forward-looking information and is not a guarantee of future performance. The
guidance is based upon the current beliefs and expectations of our management and is subject to significant risk and
uncertainties that could cause actual results to differ materially from those shown above. See Item 1A. Risk Factors - Disclosure Regarding Forward-Looking Statements .
Overview
Republic is one of the largest providers of environmental services in the United States, as measured by revenue. As of December 31, 2025, we operated across the United States and Canada through 377 collection operations, 255 transfer stations, 79 recycling centers, 207 active landfills, 2 treatment, recovery and disposal facilities, 24 treatment, storage and disposal facilities (TSDF), 5 salt water disposal wells, 15 deep injection wells, 9 industrial wastewater treatment facilities, and 2 polymer centers. We are engaged in 84 landfill gas-to-energy and other renewable energy projects and had post-closure responsibility for 124 closed landfills.
Revenue for the year ended December 31, 2025 increased by 3.5% to $16.6 billion compared to $16.0 billion in 2024. This change in revenue is due to increased average yield of 4.1% and acquisitions, net of divestitures of 1.3%, partially offset by decreases in environmental solutions revenue of 1.0%, volume of 0.6%, fuel recovery fees of 0.1% as well as the effect of a decrease in workdays of 0.1%.
The following table summarizes our revenue, costs and expenses for the years ended December 31, 2025 and 2024 (in millions of dollars and as a percentage of revenue):
Revenue
Expenses:
Cost of operations
Depreciation, amortization and depletion of property and equipment
Amortization of other intangible assets
Amortization of other assets
Accretion
Selling, general and administrative
Restructuring charges
Gain on business divestitures and impairments, net
Adjustment to withdrawal liability for multiemployer pension funds
Operating income
Our pre-tax income was $2.6 billion for the year ended December 31, 2025, compared to $2.4 billion in 2024. Our net income attributable to Republic Services, Inc. was $2.1 billion, or $6.85 per diluted share, for 2025, compared to $2.0 billion, or $6.49 per diluted share, for 2024.
During 2025 and 2024, we recorded a number of charges, other expenses and benefits that impacted our pre-tax income, tax impact, net income attributable to Republic Services, Inc. (net income – Republic) and diluted earnings per share as noted in the following table (in millions, except per share data). Additionally, see our Results of Operations section of this Management's Discussion and Analysis of Financial Condition and Results of Operations for a discussion of other items that impacted our earnings during the years ended December 31, 2025 and 2024. For comparative purposes, prior year amounts have been reclassified to conform to current year presentation.
Year Ended December 31, 2025
Year Ended December 31, 2024
Pre-tax
Income
Tax Impact (1)
Net
Income -
Republic
Diluted
Earnings
per
Share
Pre-tax
Income
Tax Impact (1)
Net
Income -
Republic
Diluted
Earnings
per
Share
As reported
Restructuring charges
Gain on extinguishment of debt and other related costs, net
Labor disruption
Gain on certain divestitures and impairments, net
Settlements and withdrawals on pension plans (2)
Total adjustments
As adjusted
(1) The income tax effect related to our adjustments includes both current and deferred income tax impact and is individually calculated based on the statutory rates applicable to each adjustment.
(2) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the year ended December 31, 2025.
We believe that presenting adjusted pre-tax income, adjusted tax impact, adjusted net income – Republic, and adjusted diluted earnings per share, which are not measures determined in accordance with U.S. GAAP, provide an understanding of operational activities before the financial impact of certain items. We use these measures, and believe investors will find them helpful, in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period. We have incurred comparable charges and costs in prior periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Our definitions of adjusted pre-tax income, adjusted tax impact, adjusted net income – Republic, and adjusted diluted earnings per share may not be comparable to similarly titled measures p resented by other companies. Further information on each of these adjustments is included below.
Restructuring charges. In 2025 and 2024, we incurred restructuring charges of $20 million and $29 million , respectively. The 2025 charges primarily related to the design and implementation of a new accounts receivable system. The 2024 charges primarily related to the redesign of our asset management, and customer and order management software systems. We paid $12 million and $25 million during 2025 and 2024, respectively, related to these restructuring efforts.
In 2026, we expect to incur restructuring charges of approximately $25 million , primarily related to the continuation of the design and implementation of our new accounts receivable system as well as the conversion of the general ledger, budgeting and procurement enterprise resource planning (ERP) systems for our environmental solutions segment.
Gain on extinguishment of debt and other related costs, net . During 2024 we recognized a loss of $2 million due to the amendment and restatement of the Credit Facility, and a net gain of $8 million attributable to the early settlement of certain cash flow hedges related to the Term Loan Facility. The gain was recognized as a reduction of interest expense.
Labor disruption. During 2025, we experienced labor disruptions in certain isolated markets. The impact of these labor disruptions was $56 million, including $16 million of customer credits and $40 million of cost of operations.
Gain on certain divestitures and impairments, net. During 2024, we recorded a net gain on certain divestitures and impairments of $30 million, of which $29 million was due to a gain on the sale of a transfer station facility and $1 million related to a gain on other business divestitures and impairments.
Settlements and withdrawals on pension plans. During 2025, we recorded a charge to earnings of $1 million for a withdrawal event at a multiemployer pension fund to which we contribute. During 2024 , we recognized a settlement of our defined benefit pension plan. The settlement included a combination of lump-sum payments to participants who elected to receive them and the transfer of benefit obligations to a third-party insurance company under a group annuity contract. As a result of the settlements, we recognized a non-cash gain of $8 million related to the accelerated recognition of the proportional share of unamortized net actuarial gains in accumulated other comprehensive loss. As we obtain updated information regarding multiemployer pension funds, the factors used in deriving our estimated withdrawal liabilities will be subject to change, which may adversely impact our reserves for withdrawal costs.
Results of Operations
Revenue
We generate revenue by providing environmental services to our customers, including the collection and processing of recyclable materials, the collection, treatment, consolidation, transfer and disposal of hazardous and non-hazardous waste and other environmental solutions. Our residential, small-container and large-container collection operations in some markets are based on long-term contracts with municipalities. Certain of our municipal contracts have annual price escalation clauses that are tied to changes in an underlying base index such as a consumer price index. We generally provide small-container and large-container collection services to customers under contracts with initial terms up to three years. Our transfer stations and landfills generate revenue from disposal or tipping fees charged to third parties. Our recycling centers generate revenue from tipping fees charged to third parties and the sale of recycled commodities. Our revenue from environmental solutions primarily consists of (1) fees we charge for the collection, treatment, transfer and disposal of hazardous and non-hazardous waste, (2) field and industrial services, (3) equipment rental, (4) emergency response and standby services, (5) in-plant services, such as transportation and logistics, including at our TSDFs and (6) in-plant services such as high-pressure cleaning, tank cleaning, decontamination, remediation, transportation, spill cleanup and emergency response at refineries, chemical, steel and automotive plants and other governmental, commercial and industrial facilities. Other non-core revenue consists primarily of revenue from National Accounts, which represents the portion of revenue generated from nationwide or regional contracts in markets outside our operating areas where the associated material handling is subcontracted to local operators. Consequently, substantially all of this revenue is offset with related subcontract costs, which are recorded in cost of operations.
The following table reflects our revenue by service line for the years ended December 31, 2025 and 2024 (in millions of dollars and as a percentage of revenue):
Collection:
Residential
Small-container
Large-container
Other
Total collection
Transfer
Less: intercompany
Transfer, net
Landfill
Less: intercompany
Landfill, net
Environmental solutions
Less: intercompany
Environmental solutions, net
Other:
Recycling processing and commodity sales
Other non-core
Total other
Total revenue
The following table reflects changes in components of our revenue, as a percentage of total revenue, for the years ended December 31, 2025 and 2024:
Average yield
Fuel recovery fees
Total price
Volume
Change in workdays
Recycling processing and commodity sales
Environmental solutions
Other (1)
Total internal growth
Acquisitions / divestitures, net
Total
Core price
(1) Other represents customer credits recognized in connection with recent labor disruptions.
Average yield is defined as revenue growth from the change in average price per unit of service, expressed as a percentage. Core price is defined as price increases to our customers and fees, excluding fuel recovery, net of price decreases to retain customers. We also measure changes in average yield, core price and volume as a percentage of related-business revenue, defined as total revenue excluding recycled commodities, fuel recovery fees and environmental solutions revenue to determine the effectiveness of our pricing strategies.
The following table reflects average yield, core price and volume as a percentage of related-business revenue for the years ended December 31, 2025 and 2024:
Years Ended December 31,
As a % of Related Business
Average yield
Core price
Volume
During 2025, we experienced the following changes in our revenue as compared to 2024:
• Average yield increased revenue by 4.1% due to positive pricing changes in all lines of business.
• The fuel recovery fee program, which mitigates our exposure to increases in fuel prices, decreased revenue by 0.1%, primarily due to a decrease in fuel prices compared to 2024.
• Volume decreased revenue by 0.6% during 2025 as compared to 2024 due to a decrease in volume in our collection lines of business as well as a decrease in solid waste volumes in our landfill line of business. The decline in revenue in our large-container collection line of business was primarily driven by slowing in construction-related activity as well as adverse weather in January and February of 2025. The decline in our residential and small-container collection lines of business is primarily attributable to certain municipal contract losses and broker-related business.
The decrease in overall volume as compared to 2024 was partially offset by an increase in construction and demolition and special waste volumes at our landfills. The increase was primarily related to Hurricane Helene recovery efforts and the Los Angeles area wildfire remediation. These events increased revenue during 2025 by approximately $100 million.
• Revenue decreased by 0.1% due to the impact of the number of workdays during 2025 as compared to 2024.
• There was no net change to revenue as a result of recycling processing and commodity sales during 2025. In 2025, volume increased at the Las Vegas Polymer Center. Volume also increased due to the opening of the Indianapolis Polymer Center and reopening of a recycling center on the west coast. This increase was offset by a decrease in overall commodity prices compared to the same period in 2024. The average price for recycled commodities, excluding glass and organics, for 2025 was $135 per ton compared to $164 per ton for 2024.
Changing market demand for recycled commodities causes volatility in commodity prices. At current volumes and mix of materials, we believe a $10 per ton change in the price of recycled commodities will change both annual revenue and operating income by approximately $13 million.
• During 2025, environmental solutions revenue decreased by 1.0% primarily due to a decline in manufacturing and emergency response activity as well as a decrease in event-based volumes into our landfills. In 2024, environmental solutions revenue included approximately $50 million from a non-recurring emergency response project.
• Acquisitions, net of divestitures, increased revenue by 1.3%, reflecting the results of our continued growth strategy of acquiring environmental services companies that complement and expand our existing business platform.
Cost of Operations
Cost of operations includes labor and related benefits, which consists of salaries and wages, health and welfare benefits, incentive compensation and payroll taxes. It also includes transfer and disposal costs representing tipping fees paid to third party disposal facilities and transfer stations; maintenance and repairs relating to our vehicles, equipment and containers, including related labor and benefit costs; transportation and subcontractor costs, which include costs for independent haulers that transport our waste to disposal facilities and costs for local operators that provide waste handling services associated with our National Accounts in markets outside our standard operating areas; fuel, which includes the direct cost of fuel used by our vehicles, net of fuel tax credits; disposal fees and taxes, consisting of landfill taxes, host community fees and royalties; landfill operating costs, which includes financial assurance, leachate disposal, remediation charges and other landfill maintenance costs; risk management costs, which include insurance premiums and claims; and other, which includes expenses such as facility operating costs, equipment rent and gains or losses on the sale of assets used in our operations.
The following table summarizes the major components of our cost of operations for the years ended December 31, 2025 and 2024 (in millions of dollars and as a percentage of revenue):
Labor and related benefits
Transfer and disposal costs
Maintenance and repairs
Transportation and subcontract costs
Fuel
Disposal fees and taxes
Landfill operating costs
Risk management
Other
Subtotal
Gain on certain divestitures and impairments, net
Labor disruption
Total cost of operations
These cost categories may change from time to time and may not be comparable to similarly titled categories presented by other companies. As such, you should take care when comparing our cost of operations by component to that of other companies and of ours for prior periods.
Our cost of operations increased in aggregate dollars for the year ended December 31, 2025 compared to 2024 as a result of the following:
• Labor and related benefits increased in aggregate dollars primarily due to higher hourly and salaried wages as a result of annual merit increases as well as acquisition related growth.
• Transfer and disposal costs decreased primarily due to a decrease in collection volumes.
During both 2024 and 2025, approximately 67% of the total solid waste volume we collected was disposed at landfill sites that we own or operate (internalization).
• Maintenance and repairs expense increa se d in aggregate dollars due to higher hourly wages as a result of annual merit increases, parts inflation, an increase in third-party maintenance and acquisition related growth .
• Transportation and subcontract costs decreased primarily due to a decrease in volume in our environmental solutions business.
• Our fuel costs decreased due to a decrease in the average diesel fuel cost per gallon. The national average diesel fuel cost per gallon for 2025 was $3.66 compared to $3.76 for 2024.
At current consumption levels, we believe a twenty-cent per gallon change in the price of diesel fuel would change our fuel costs by approximately $26 million per year. Offsetting these changes in fuel expense would be changes in our fuel recovery fee charged to our customers. At current participation rates, we believe a twenty-cent per gallon change in the price of diesel fuel would change our fuel recovery fee by approximately $42 million per year.
• Landfill operating costs increased in aggregate dollars primarily due to an increase in monitoring and maintenance costs on our gas and leachate extraction systems. These increases were partially offset by a decrease in unfavorable remediation adjustments as compared to 2024.
• Risk management expenses increased primarily due to higher premium costs.
• Other costs of operations increased during 2025 due to increased occupancy and facility related expenses, acquisition-related activity and a favorable non-recurring insurance recovery recognized in 2024.
• During 2025, we experienced labor disruptions in certain isolated markets. We incurred $40 million of cost of operations primarily as a result of an increase in labor and other cost of operations.
Depreciation, Amortization and Depletion of Property and Equipment
The following table summarizes depreciation, amortization and depletion of property and equipment for the years ended December 31, 2025 and 2024 (in millions of dollars and as a percentage of revenue):
Depreciation and amortization of property and equipment
Landfill depletion and amortization
Depreciation, amortization and depletion expense
Depreciation and amortization of property and equipment increased largely due to an increased investment in trucks and the supporting infrastructure as well as assets added through acquisitions.
Landfill depletion and amortization expense increased in aggregate dollars due to increased construction and demolition volumes related to Hurricane Helene recovery efforts and increased special waste volumes attributable to the Los Angeles area wildfire remediation. Landfill depletion and amortization also increased due to an increase in our overall average depletion rate.
Amortization of Other Intangible Assets
Amortization of other intangible assets primarily relates to customer relationships. Expenses for amortization of other intangible assets were $89 million, or 0.6% of revenue, for the year ended December 31, 2025, compared to $79 million, or 0.5% of revenue, for 2024. Amortization expense increased in aggregate dollars due to additional assets acquired through our acquisition activity.
Amortization of Other Assets
Our other assets primarily relate to the prepayment of fees and capitalized implementation costs associated with cloud-based hosting arrangements. Expenses for amortization of other assets were $110 million, or 0.7% of revenue, for the year ended December 31, 2025, compared to $81 million, or 0.5% of revenue, for 2024.
Accretion Expense
Accretion expense was $114 million, or 0.7% of revenue, and $107 million, or 0.7% of revenue, for the years ended December 31, 2025 and 2024, respectively.
Selling, General and Administrative Expenses
Selling, general and administrative expenses include salaries, health and welfare benefits and incentive compensation for corporate and field general management, field support functions, sales force, accounting and finance, legal, management information systems and clerical and administrative departments. Other expenses include rent and office costs, fees for professional services provided by third parties, legal settlements, marketing, investor and community relations services, directors’ and officers’ insurance, general employee relocation, travel, entertainment and bank charges. Restructuring charges are excluded from selling, general and administrative expenses and are discussed separately.
The following table summarizes our selling, general and administrative expenses for the years ended December 31, 2025 and 2024 (in millions of dollars and as a percentage of revenue):
Salaries and related benefits
Provision for doubtful accounts
Other
Total selling, general and administrative expenses
These cost categories may change from time to time and may not be comparable to similarly titled categories used by other companies. As such, you should take care when comparing our selling, general and administrative expenses by cost component to those of other companies and of ours for prior periods.
The most significant items affecting our selling, general and administrative expenses during 2025 as compared to 2024 are summarized below:
• Salaries and related benefits decreased primarily due to a decrease in management incentive compensation. This decrease was partially offset by higher wages and benefits resulting from annual merit increases.
• Other selling, general and administrative expenses increased for the year ended December 31, 2025, largely due to a legal settlement recognized during the period.
Gain on Business Divestitures and Impairments, Net
We strive to have a leading market position in each of the markets we serve, or have a clear path on how we will achieve a leading market position over time. Where we cannot establish a leading market position, or where operations are not generating acceptable returns, we may decide to divest certain assets and reallocate resources to other markets. Business divestitures could result in gains, losses or impairment charges that m ay be material to our results of operations in a given period.
During the year ended December 31, 2025, we did not record a gain on business divestitures and impairments. During the year ended December 31, 2024, we recorded a gain on business divestitures and impairments of $1 million.
Restructuring Charges
For a discussion of restructuring charges incurred during the years ended December 31, 2025 and 2024, see Overview of this Management's Discussion and Analysis of Financial Condition and Results of Operations.
Interest Expense
The following table provides the components of interest expense, including accretion of debt discounts and accretion of discounts primarily associated with environmental and risk insurance liabilities assumed in acquisitions for the years ended December 31, 2025 and 2024 (in millions of dollars):
Interest expense on debt
Non-cash interest
Less: capitalized interest
Total interest expense
Total interest expense for 2025 increased primarily due to a higher overall debt balance as well as higher interest rates on our debt compared to 2024.
Cash paid for interest, excluding net swap settlements for interest rate swaps, was $500 million and $487 million for the years ended December 31, 2025 and 2024, respectively.
As of December 31, 2025, we had $2.6 billion of floating rate debt. If interest rates increased or decreased by 100 basis points on our floating rate debt, annualized interest expense and net cash payments for interest would increase or decrease by approximately $26 million.
Loss on Extinguishment of Debt
During the year ended December 31, 2025, we did not recognize a loss on extinguishment of debt. During the year ended December 31, 2024, we recognized a loss of $2 million due to the amendment and restatement of the Credit Facility.
Adjustment to Withdrawal Liability for Multiemployer Pension Funds
During 2025, we recorded a $1 million charge related to the withdrawal from a certain multiemployer pension plan. As we obtain updated information regarding multiemployer pension funds, the factors used in deriving our estimated withdrawal liabilities will be subject to change, which may adversely impact our reserves for withdrawal costs.
Income Taxes
Our provision for income taxes was $455 million and $388 million for 2025 and 2024, respectively. Our effective tax rate, exclusive of non-controlling interests, for the years ended December 31, 2025 and 2024 was 17.5% and 16.0%, respectively.
During 2024 and 2025 , we acquired non-controlling interests in limited liability companies established to own renewable energy assets that qualified for investment tax credits under Section 48 of the Internal Revenue Code. We account for these investments under the equity method of accounting utilizing the Hypothetical Liquidation at Book Value ("HLBV") method and recognize our share of income or loss and other reductions in the value of our investment in loss from unconsolidated equity method investments within our consolidated statements of income. For further discussion regarding our equity method accounting, see Note 3, Business Acquisitions, Investments and Restructuring Charges , of the notes to our audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
On July 4, 2025, the One Big Beautiful Bill Act (the "Act”) was signed into law. The Act, among other things, implemented changes to the tax treatment relating to bonus depreciation, research and experimental expenditures and interest expense, and
included phase-outs and restrictions on several clean energy tax incentives. We made income tax payments (net of refunds) of $206 million and $313 million for 2025 and 2024, respectively. Income taxes paid in 2025 reflect benefits from the Act as well as tax credits from our continuing investments in qualified renewable energy projects. The Act did not have a material impact on our effective tax rate. The Company is continuing to evaluate the potential impact of the Act on future years' tax positions.
We have deferred tax assets related to state net operating loss carryforwards with an estimated tax effect of $51 million available as of December 31, 2025. These state net operating loss carryforwards expire at various times between 2026 and 2045. We believe that it is more likely than not that the benefit from some of our state net operating loss carryforwards will not be realized due to limitations on these loss carryforwards in certain states. In recognition of this risk, as of December 31, 2025, we have provided a valuation allowance of $40 million.
For additional discussion and detail regarding our income taxes, see Note 11, Income Taxes , of the notes to our audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Reportable Segments
Our senior management evaluates, oversees and manages the financial performance of our operations through three field groups, referred to as Group 1, Group 2 and Group 3. Group 1 is our recycling and waste business operating primarily in geographic areas located in the western United States. Group 2 is our recycling and waste business operating primarily in geographic areas located in the southeastern and mid-western United States, the eastern seaboard of the United States, and Canada. Group 3 is our environmental solutions business operating in geographic areas located across the United States and Canada. These groups are presented below as our reportable segments, which each provide integrated environmental services, including but not limited to collection, transfer, recycling and disposal.
Corporate functions include marketing, operations support, business development, legal, tax, treasury, information technology, risk management, human resources and other administrative functions. National Accounts revenue included in Corporate entities and other represents the portion of revenue generated from nationwide and regional contracts in markets outside our operating areas where the associated material handling is subcontracted to local operators. Revenue and overhead costs of Corporate entities and other are either specifically assigned or allocated on a rational and consistent basis among our reportable segments to calculate adjusted EBITDA.
Our chief operating decision maker (CODM) is Jon Vander Ark, President and Chief Executive Officer of Republic Services, Inc. Adjusted EBITDA is the single financial measure our CODM uses to evaluate segment profitability and returns, which informs resource allocation. For all segments, the CODM uses adjusted EBITDA to evaluate income generated from segment assets (return on invested capital). The CODM considers budget-to-actual variances and year-over-year growth on a monthly basis to assess the performance of each segment. Cost of operations and selling, general and administrative expenses are significant segment expenses used in the evaluation.
Summarized financial information regarding our reportable segments for the years ended December 31, 2025 and 2024 (in millions of dollars) follows. For totals as well as further detail regarding our reportable segments and the adjustments used to calculate adjusted EBITDA for each segment, see Note 15, Segment Reporting , of the notes to our audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Group 1
Group 2
Recycling & Waste Subtotal (1)
Group 3
(Environmental Solutions)
Corporate entities and other
Total
Gross revenue
Intercompany revenue
Revenue allocations
Net revenue
Cost of operations
Selling, general and administrative
Other segment items
Adjusted EBITDA
Capital expenditures
Total assets
Group 1
Group 2
Recycling & Waste Subtotal (1)
Group 3
(Environmental Solutions)
Corporate entities and other
Total
Gross revenue
Intercompany revenue
Revenue allocations
Net revenue
Cost of operations
Selling, general and administrative
Other segment items
Adjusted EBITDA
Capital expenditures
Total assets
(1) The Recycling & Waste Subtotal represents the combined results of our Group 1 and Group 2 reportable segments.
Significant changes in the revenue and adjusted EBITDA of our reportable segments for 2025 compared to 2024 are discussed below.
Group 1
Adjusted EBITDA in Group 1 increased from $2.3 billion for the year ended December 31, 2024 to $2.5 billion for the year ended December 31, 2025.
The most significant items impacting adjusted EBITDA in Group 1 during the year ended December 31, 2025 compared to the year ended December 31, 2024 include:
• Net revenue for the year ended December 31, 2025 increased 6.6% from 2024 due to an increase in average yield in all lines of business and higher special waste volumes in our landfill line of business. The increase in special waste volumes was primarily driven by the Los Angeles area wildfire remediation. The increases were partially offset by decreased volume in our large-container and residential collection lines of business. The decrease in volume was also negatively impacted by lower solid waste and construction and demolition volumes in our landfill line of business.
• Cost of operations increased primarily due to an increase in labor costs, equipment maintenance and insurance premiums.
Group 2
Adjusted EBITDA in Group 2 increased from $2.3 billion for the year ended December 31, 2024 to $2.4 billion for the year ended December 31, 2025.
The most significant items impacting adjusted EBITDA in Group 2 during the year ended December 31, 2025 compared to the year ended December 31, 2024 include:
• Net revenue for the year ended December 31, 2025 increased 2.4% from 2024 due to an increase in average yield in all lines of business and increased volume in our landfill line of business. The increase in volume in our landfill line of business was primarily due to increased construction and demolition volume related to the Hurricane Helene recovery efforts as well as increased special waste volumes. These increases were partially offset by decreased volumes in our collection and transfer lines of business.
• Cost of operations increased due to an increase in our insurance premiums and landfill operating costs.
Group 3
Adjusted EBITDA in Group 3 decreased from $433 million for the year ended December 31, 2024 to $372 million for the year ended December 31, 2025.
The most significant items impacting adjusted EBITDA in Group 3 during the year ended December 31, 2025 compared to the year ended December 31, 2024 include:
• Net revenue for the year ended December 31, 2025 decreased due to a decline in manufacturing and emergency response activity as well as a decrease in event-based volumes into our landfills, partially offset by acquisition related growth and price increases relative to 2024.
• Cost of operations decreased primarily due to a decrease in volumes and subcontract costs partially offset by higher labor costs relative to 2024.
Landfill and Environmental Matters
Our landfill costs include daily operating expenses, costs of capital for cell development, costs for final capping, closure and post-closure and the legal and administrative costs of ongoing environmental compliance. Daily operating expenses include leachate treatment, transportation and disposal costs, methane gas and groundwater monitoring and system maintenance costs, interim cap maintenance costs and costs associated with applying daily cover materials. We expense all indirect landfill development costs as they are incurred. We use life cycle accounting and the units-of-consumption method to recognize certain direct landfill costs related to landfill development. In life cycle accounting, certain direct costs are capitalized and charged to depletion expense based on the consumption of cubic yards of available airspace. These costs include all costs to acquire and construct a site, including excavation, natural and synthetic liners, construction of leachate collection systems, installation of methane gas collection and monitoring systems, installation of groundwater monitoring wells and other costs associated with acquiring and developing the site. Obligations associated with final capping, closure and post-closure are capitalized and amortized on a units-of-consumption basis as airspace is consumed.
Cost and airspace estimates are developed at least annually by engineers. Our operating and accounting personnel use these estimates to adjust the rates we use to expense capitalized costs. Changes in these estimates primarily relate to changes in cost estimates, available airspace, inflation and applicable regulations. Changes in available airspace include changes in engineering estimates, changes in design and changes due to the addition of airspace lying in expansion areas that we believe have a probable likelihood of being permitted. Changes in engineering estimates typically include modifications to the available disposal capacity of a landfill based on a refinement of the capacity calculations resulting from updated information.
Available Airspace
As of December 31, 2025 , we owned or operated 207 active landfills with total available disposal capacity estimated to be 5 billion in-place cubic yards. For these landfills, the following table reflects changes in capacity and remaining capacity, as measured in cubic yards of airspace, as of December 31, 2025.
Balance as of December 31, 2024
New
Expansions
Undertaken
Landfills
Acquired,
Net of
Divestitures
Permits Granted /
New Sites,
Net of Closures
Airspace
Consumed
Changes in
Engineering
Estimates
Balance as of December 31, 2025
Cubic yards (in millions):
Permitted airspace
Probable expansion airspace
Total cubic yards (in millions)
Number of sites:
Permitted airspace
Probable expansion airspace
The following table reflects changes in capacity and remaining capacity for these landfills, as measured in cubic yards of airspace, as of December 31, 2024 .
Balance as of December 31, 2023
New
Expansions
Undertaken
Landfills
Acquired,
Net of
Divestitures
Permits Granted /
New Sites,
Net of Closures
Airspace
Consumed
Changes in
Engineering
Estimates
Balance as of December 31, 2024
Cubic yards (in millions):
Permitted airspace
Probable expansion airspace
Total cubic yards (in millions)
Number of sites:
Permitted airspace
Probable expansion airspace
Total available disposal capacity represents the sum of estimated permitted airspace plus an estimate of probable expansion airspace. Engineers develop these estimates at least annually using information provided by annual aerial surveys. Before airspace included in an expansion area is determined to be probable expansion airspace and, therefore, included in our calculation of total available disposal capacity, it must meet all of our expansion criteria. See Note 2, Summary of Significant Accounting Policies, and Note 8, Landfill and Environmental Costs , of the notes to our audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for further information. Also see our Critical Accounting Judgments and Estimates section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.
As of December 31, 2025, 12 of our landfills met all of our criteria for including their probable expansion airspace in their total available disposal capacity. At projected annual volumes, these 12 landfills have an estimated remaining average site life of 32 years, including probable expansion airspace. The average estimated remaining life of all of our landfills is 56 years. We have other expansion opportunities that are not included in our total available airspace because they do not meet all of our criteria for treatment as probable expansion airspace.
The following table reflects the estimated operating lives of our active landfill sites based on available and probable disposal capacity using current annual volumes as of December 31, 2025:
Number
of Sites
without
Probable
Expansion
Airspace
Number
of Sites
with
Probable
Expansion
Airspace
Total
Sites
Percent
Total
0 to 5 years
6 to 10 years
11 to 20 years
21 to 40 years
41+ years
Total
Final Capping, Closure and Post-Closure Costs
As of December 31, 2025, accrued final capping, closure and post-closure costs were $2,313 million, of which $87 million were current and $2,226 million were long-term as reflected in our consolidated balance sheets in accrued landfill and environmental costs included in Part II, Item 8 of this Annual Report on Form 10-K.
Remediation and Other Charges for Landfill Matters
It is reasonably possible that we will need to adjust our accrued landfill and environmental liabilities to reflect the effects of new or additional information, to the extent that such information impacts the costs, timing or duration of the required actions. Future changes in our estimates of the costs, timing or duration of the required actions could have a material adverse effect on our consolidated financial position, results of operations and cash flows.
For a description of our significant remediation matters, see Note 8, Landfill and Environmental Costs, of the notes to our audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Investment in Landfills
As of December 31, 2025, we expect to spend an estimated additional $13 billion on existing landfills, primarily related to cell construction and environmental structures, over their remaining lives. Our total expected investment, excluding non-depletable land, estimated to be $18.2 billion , or $3.62 per cubic yard, is used in determining our depletion and amortization expense based on airspace consumed using the units-of-consumption method.
The following table reflects our future expected investment as of December 31, 2025 (in millions):
Balance as of December 31, 2025
Expected
Future
Investment
Total
Expected
Investment
Non-depletable landfill land
Landfill development costs
Construction-in-progress – landfill
Accumulated depletion and amortization
Net investment in landfill land and development costs
The following table reflects our net investment in our landfills, excluding non-depletable land, and our depletion, amortization and accretion expense for the years ended December 31, 2025 and 2024:
Number of landfills owned or operated
Net investment, excluding non-depletable land (in millions)
Total estimated available disposal capacity (in millions of cubic yards)
Net investment per cubic yard
Landfill depletion and amortization expense (in millions)
Accretion expense (in millions)
Airspace consumed (in millions of cubic yards)
Depletion, amortization and accretion expense per cubic yard of airspace consumed
During 2025 and 2024, our average compaction rate was approximately 2,000 pounds per cubic yard based primarily on a three-year historical moving average.
Property and Equipment
The following tables reflect the activity in our property and equipment accounts for the year ended December 31, 2025 (in millions of dollars):
Gross Property and Equipment
Balance as of December 31, 2024
Capital
Additions
Retirements
Acquisitions,
Net of
Divestitures
Non-Cash
Additions
for Asset
Retirement
Obligations
Adjustments
for
Asset
Retirement
Obligations
Impairments,
Transfers
and
Other
Adjustments
Balance as of December 31, 2025
Land
Landfill development costs
Vehicles and equipment
Buildings and improvements
Construction-in-progress - landfill
Construction-in-progress - other
Total
Accumulated Depreciation, Amortization and Depletion
Balance as of December 31, 2024
Additions
Charged
Expense
Retirements
Acquisitions,
Net of
Divestitures
Adjustments
for
Asset
Retirement
Obligations
Impairments,
Transfers
and
Other
Adjustments
Balance as of December 31, 2025
Landfill development costs
Vehicles and equipment
Buildings and improvements
Total
The following tables reflect the activity in our property and equipment accounts for the year ended December 31, 2024 (in millions of dollars):
Gross Property and Equipment
Balance as of December 31, 2023
Capital
Additions
Retirements
Acquisitions,
Net of
Divestitures
Non-Cash
Additions
for Asset
Retirement
Obligations
Adjustments
for
Asset
Retirement
Obligations
Impairments,
Transfers
and
Other
Adjustments
Balance as of December 31, 2024
Land
Landfill development costs
Vehicles and equipment
Buildings and improvements
Construction-in-progress - landfill
Construction-in-progress - other
Total
Accumulated Depreciation, Amortization and Depletion
Balance as of December 31, 2023
Additions
Charged
Expense
Retirements
Acquisitions,
Net of
Divestitures
Adjustments
for
Asset
Retirement
Obligations
Impairments,
Transfers
and
Other
Adjustments
Balance as of December 31, 2024
Landfill development costs
Vehicles and equipment
Buildings and improvements
Total
Liquidity and Capital Resources
Cash and Cash Equivalents
The following is a summary of our cash and cash equivalents and restricted cash and marketable securities balances as of December 31:
Cash and cash equivalents
Restricted cash and marketable securities
Less: restricted marketable securities
Cash, cash equivalents, restricted cash and restricted cash equivalents
Our restricted cash and marketable securities include amounts pledged to regulatory agencies and governmental entities as financial guarantees of our performance under certain collection, landfill and transfer station contracts and permits, and relating to our final capping, closure and post-closure obligations at our landfills as well as restricted cash and marketable securities related to our insurance obligations.
The following table summarizes our restricted cash and marketable securities as of December 31:
Capping, closure and post-closure obligations
Insurance
Total restricted cash and marketable securities
Material Cash Requirements and Intended Uses of Cash
We expect existing cash, cash equivalents, restricted cash and marketable securities, cash flows from operations and financing activities to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months and thereafter for the foreseeable future. Our known current- and long-term uses of cash include, among other possible demands: (1) capital expenditures and leases, (2) acquisitions, (3) dividend payments, (4)
payments to service debt and other long-term obligations, (5) payments for asset retirement obligations and environmental liabilities and (6) share repurchases.
We may choose to voluntarily retire certain portions of our outstanding debt before their maturity dates using cash from operations or additional borrowings. We may also explore opportunities in the capital markets to fund redemptions of our debt should market conditions be favorable. Early extinguishment of debt will result in a loss in the period in which the debt is repaid. The loss on early extinguishment of debt relates to premiums paid to effectuate the repurchase and the relative portion of unamortized note discounts and debt issuance costs.
Capital Expenditures and Leases
We make investments in property and equipment primarily to allow for growth of our service offerings. These investments are largely concentrated in vehicles and equipment and costs to construct our landfills. We expect to receive between $1.96 billion to $2.00 billion of property and equipment, net of proceeds from the sale of property and equipment, in 2026.
We lease property and equipment in the ordinary course of business under various lease agreements. The most significant lease obligations are for real property and equipment specific to our industry, including property operated as a landfill or transfer station and operating equipment. As of December 31, 2025, the amount of total future lease payments under operating and finance leases was $248 million and $485 million, respectively. For additional detail regarding our lease obligations, see Note 10, Leases , of the notes to our audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Acquisitions
Our acquisition growth strategy focuses primarily on acquiring privately held recycling and waste companies and environmental solutions businesses that complement our existing business platform. We continue to invest in value-enhancing acquisitions in existing markets.
We expect to invest approximately $1 billion in acquisitions in 2026.
Dividend Payments
In October 2025 our Board of Directors approved a quarterly dividend of $0.625 per share. Aggregate cash dividends declared were $749 million for the year ended December 31, 2025. As of December 31, 2025, we recorded a quarterly dividend payable of $193 million to shareholders of record at the close of business on January 2, 2026, which was paid on January 15, 2026.
Debt and other long-term obligations
Debt repayments may include purchases of our outstanding indebtedness in the secondary market or otherwise. We believe that our excess cash, cash from operating activities and our availability to draw on our credit facilities provide us with sufficient financial resources to meet our anticipated capital requirements and maturing obligations as they come due.
We may choose to voluntarily retire certain portions of our outstanding debt before their maturity dates using cash from operations or additional borrowings. We may also explore opportunities in the capital markets to fund redemptions of our debt should market conditions be favorable. Early extinguishment of debt will result in an impairment charge in the period in which the debt is repaid. The loss on early extinguishment of debt relates to premiums paid to effectuate the repurchase and the relative portion of unamortized note discounts and debt issue costs.
In May 2022, we entered into a commercial paper program for the issuance and sale of unsecured commercial paper in an aggregate principal amount not to exceed $500 million outstanding at any one time (the Commercial Paper Cap). In August 2022, the Commercial Paper Cap was increased to $1.0 billion, and in October 2023, was increased to $1.5 billion. The weighted average interest rate for borrowings outstanding as of December 31, 2025 was 4.044%. In the event of a failed re-borrowing, we currently have availability under our Credit Facility (as defined below) to fund the amounts borrowed under the commercial paper program until they are re-borrowed successfully. Accordingly, we have classified these borrowings as long-term in our consolidated balance sheet as of December 31, 2025.
As of December 31, 2025, the total principal value of our debt was $13.7 billion, of which $596 million is due in 2026.
We have several agreements that require us to dispose of a minimum number of tons at third-party disposal facilities. Under these put-or-pay agreements, we must pay for agreed-upon minimum volumes regardless of the actual number of tons placed at the facilities.
Our unconditional purchase commitments have varying expiration dates, with some extending through the remaining life of the respective landfill. Future minimum payments under unconditional purchase commitments consist primarily of (1) disposal related agreements, which include fixed or minimum royalty payments, host agreements and take-or-pay and put-or-pay agreements and (2) other obligations including committed capital expenditures and consulting service agreements. As of December 31, 2025, such purchase commitments, which do not qualify for recognition on our Consolidated Balance Sheets, amount to $944 million, of which $196 million was short-term.
For additional detail regarding our debt and known contractual and other obligations, see Note 9, Debt, and Note 18, Commitments and Contingencies , of the notes to our audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Asset Retirement Obligations and Environmental Liabilities
We have future obligations for final capping, closure and post-closure costs with respect to the landfills we own or operate as set forth in applicable landfill permits. As of December 31, 2025, our future obligations for final capping, closure and post-closure costs totaled $2.3 billion, of which $87 million was short-term.
Additionally, we are subject to an array of laws and regulations relating to the protection of the environment, and we remediate sites in the ordinary course of our business. Our environmental remediation liabilities primarily include costs associated with remediating groundwater, surface water and soil contamination, as well as controlling and containing methane gas migration and the related legal costs. As of December 31, 2025, our environmental liabilities totaled $443 million, of which $61 million was short-term.
For additional detail regarding our asset retirement obligations and environmental liabilities, see Note 8, Landfill and Environmental Costs , of the notes to our audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Share Repurchases
In October 2023, our Board of Directors approved a $3 billion share repurchase authorization effective starting January 1, 2024 and extending through December 31, 2026. Share repurchases under the current program may be made through open market purchases or privately negotiated transactions in accordance with applicable federal securities laws. While the Board of Directors has approved the program, the timing of any purchases, the prices and the number of shares of common stock to be purchased will be determined by our management, at its discretion, and will depend upon market conditions and other factors. The share repurchase program may be extended, suspended or discontinued at any time. As of December 31, 2025, the remaining authorized purchase capacity under our October 2023 repurchase program was $1.7 billion.
Summary of Cash Flow Activity
The major components of changes in cash flows for 2025 and 2024 are discussed in the following paragraphs. The following table summarizes our cash flow from operating activities, investing activities and financing activities for the years ended December 31, 2025 and 2024 (in millions of dollars):
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Cash Flows Provided by Operating Activities
The most significant items affecting the comparison of our operating cash flows for 2025 and 2024 are summarized below.
Changes in assets and liabilities, net of effects from business acquisitions and divestitures, decreased our cash flow from operations by $359 million in 2025, compared to a decrease of $378 million during the same period in 2024, primarily as a result of the following:
• Our accounts receivable, exclusive of the change in allowance for doubtful accounts and customer credits, increased $87 million during 2025, due to the timing of billings net of collections, compared to a $76 million increase in the same period in 2024. As of December 31, 2025, our days sales outstanding were 41.8, or 30.8 days net of deferred revenue, compared to 40.9, or 30.0 days net of deferred revenue, as of December 31, 2024.
• Our prepaid expenses and other assets increased $174 million in 2025 compared to a $171 million increase in 2024. The increase in prepaid expenses and other assets during 2025 is primarily driven by an increase in costs associated with cloud-based hosting arrangements and prepaid insurance premiums.
• Our accounts payable decreased $14 million during 2025 compared to a $27 million decrease during 2024, due to the timing of payments.
• Cash paid for capping, closure and post-closure obligations was $70 million during 2025 compared to $56 million for 2024. The increase in cash paid for capping, closure and post-closure obligations is primarily due to the timing of capping and post-closure payments at certain of our landfill sites.
• Cash paid for remediation obligations was $8 million lower during 2025 compared to 2024.
• Our other liabilities increased $40 million during 2025 compared to a $14 million increase during 2024, primarily due to the timing of payments for accrued legal settlements and an increase in insurance reserves, partially offset by a decrease in management incentive compensation.
In addition, cash paid for interest was $500 million and $487 million, excluding net swap settlements for our fixed to floating interest rate swaps, for 2025 and 2024, respectively. Cash paid for income taxes was $206 million and $313 million for 2025 and 2024, respectively.
We use cash flows from operations to fund capital expenditures, acquisitions, dividend payments, debt repayments and share repurchases.
Cash Flows Used in Investing Activities
The most significant items affecting the comparison of our cash flows used in investing activities for 2025 and 2024 are summarized below:
• Capital expenditures during both 2025 and 2024 were $1.9 billion.
• During 2025 and 2024, we used $1.4 billion and $753 million, respectively, for acquisitions and investments, net of cash acquired.
We intend to finance capital expenditures and acquisitions through cash on hand, restricted cash held for capital expenditures, cash flows from operations, our revolving credit facilities and tax-exempt bonds and other financings. We expect to primarily use cash and borrowings under our revolving credit facilities to pay for future acquisitions.
Cash Flows Used in Financing Activities
The most significant items affecting the comparison of our cash flows used in financing activities for 2025 and 2024 are summarized below:
• During 2025, we issued $1,200 million of senior notes for cash proceeds, net of discounts and fees, of $1,183 million. During 2024, we issued $900 million of senior notes for cash proceeds, net of discounts and fees, of $889 million. Net payments of notes payable and long-term debt were $491 million during 2025, compared to net payments of $1,089 million in 2024. For a more detailed discussion, see the Financial Condition section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
• During 2025, we repurchased 3.8 million shares of our common stock for $864 million, which included the cash paid for excise tax on share repurchases, compared to repurchases of 2.5 million shares for $480 million during 2024.
• In July 2025, our Board of Directors approved an increase in our quarterly dividend to $0.625 per share. Dividends paid were $738 million and $687 million in 2025 and 2024, respectively.
Financial Condition
Debt Obligations
As of December 31, 2025 , we had $596 million of principal debt maturing within the next 12 months, which includes certain finance lease obligations. All of our tax-exempt financings are remarketed either quarterly or semiannually by remarketing agents to effectively maintain a variable yield, with the exception of three tax-exempt financings with initial remarketing periods of 10 years. The holders of the bonds can put them back to the remarketing agents at the end of each interest period. If the remarketing agent is unable to remarket our bonds, the remarketing agent can put the bonds to us. In the event of a failed remarketing, as of December 31, 2025 , we had availability under our Credit Facility (defined below) to fund these bonds until they are remarketed successfully. In the event of a failed re-borrowing under our commercial paper program, as of December 31, 2025, we had availability under our Credit Facility to fund the amounts borrowed under the commercial paper program until it is re-borrowed successfully. Accordingly, we have classified these tax-exempt financings and commercial paper program borrowings as long-term in our consolidated balance sheet as of December 31, 2025 .
For further discussion of the components of our overall debt, see Note 9, Debt , of the notes to our audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Credit Facilities
Uncommitted Credit Facility
In January 2022, we entered into a $200 million unsecured uncommitted revolving credit facility (the Uncommitted Credit Facility). The Uncommitted Credit Facility bears interest at an annual percentage rate to be agreed upon by both parties. Borrowings under the Uncommitted Credit Facility can be used for working capital, letters of credit and other general corporate purposes. The agreement governing our Uncommitted Credit Facility requires us to comply with certain covenants. The Uncommitted Credit Facility may be terminated by either party at any time. As of December 31, 2025 and 2024, we had no borrowings outstanding under our Uncommitted Credit Facility.
The Credit Facility
In July 2024, we and our subsidiary, USE Canada Holdings, Inc. (the Canadian Borrower) entered into the Second Amended and Restated Credit Agreement (the Credit Facility) which amended and restated the unsecured revolving credit facility we entered into in August 2021. The total outstanding principal amount that we may borrow under the Credit Facility may not exceed the current aggregate lenders' commitments of $3.5 billion, and borrowings under the Credit Facility mature in July 2029. As permitted by the Credit Facility, we have the right to request two one-year extensions of the maturity date, but none of the lenders are committed to participate in such extensions. The Credit Facility also includes a feature that allows us to increase availability, at our option, by an aggregate amount of up to $1.0 billion through increased commitments from existing lenders or the addition of new lenders.
All loans to the Canadian Borrower and all loans denominated in Canadian dollars cannot exceed $1.0 billion (the Canadian Sublimit). The Canadian Sublimit is part of, and not in addition to, the aggregate commitments under the Credit Facility.
Borrowings under the Credit Facility in United States dollars bear interest at a Base Rate, a daily floating SOFR or a term SOFR plus a current applicable margin of 0.805% based on our Debt Ratings (all as defined in the Credit Facility agreement). The Canadian dollar-denominated loans bear interest based on the Canadian Prime Rate or the Canadian Dollar Offered Rate plus a current applicable margin of 0.805% based on our Debt Ratings. As of December 31, 2025 and 2024, C$204 million and C$232 million, respectively, were outstanding against the Canadian Sublimit.
The Credit Facility is subject to facility fees based on applicable rates defined in the Credit Facility agreement and the aggregate commitment, regardless of usage. The Credit Facility can be used for working capital, capital expenditures, acquisitions, letters of credit and other general corporate purposes. The Credit Facility agreement requires us to comply with financial and other covenants. We may pay dividends and repurchase common stock if we are in compliance with these covenants.
We had $425 million and $514 million outstanding under the Credit Facility as of December 31, 2025 and 2024, respectively. We had $319 million and $317 million of letters of credit outstanding under the Credit Facility as of December 31, 2025 and 2024, respectively. We also had $1.0 billion and $477 million of principal borrowings outstanding under our commercial paper program as of December 31, 2025 and 2024, respectively. As a result, availability under the Credit Facility was $1.8 billion and $2.2 billion as of December 31, 2025 and 2024, respectively.
Credit Facility Financial and Other Covenants
The Credit Facility requires us to comply with financial and other covenants. To the extent we are not in compliance with these covenants, we cannot pay dividends or repurchase common stock. Compliance with covenants also is a condition for any incremental borrowings under the Credit Facility, and failure to meet these covenants would enable the lenders to require repayment of any outstanding loans (which would adversely affect our liquidity). Additionally, if we are not in compliance with these covenants, we could not use the availability under our Credit Facility to fund borrowings we currently make under our commercial paper program, if there is a failed reborrowing under that program. The Credit Facility provides that our total debt to EBITDA ratio may not exceed 3.75 to 1.00 as of the last day of any fiscal quarter. In the case of an "elevated ratio period", which may be elected by us if one or more acquisitions during a fiscal quarter involve aggregate consideration in excess of $200.0 million (the Trigger Quarter), the total debt to EBITDA ratio may not exceed 4.25 to 1.00 during the Trigger Quarter and for the three fiscal quarters thereafter. The Credit Facility also provides that there may not be more than two elevated ratio periods during the term of the Credit Facility agreement. As of December 31, 2025, our total debt to EBITDA ratio was approximately 2.6 compared to the 3.75 maximum allowed. As of December 31, 2025, we were in compliance with all other covenants unde r our Credit Facility .
EBITDA, which is a non-U.S. GAAP measure, is calculated as defined in our Credit Facility agreement. In this context, EBITDA is used solely to provide information regarding the extent to which we are in compliance with debt covenants and is not comparable to EBITDA used by other companies or used by us for other purposes.
Failure to comply with the financial and other covenants under the Credit Facility, as well as the occurrence of certain material adverse events, would constitute defaults and would allow the lenders under the Credit Facility to accelerate the maturity of all
indebtedness under the Credit Facility. This could have an adverse effect on the availability of financial assurances. In addition, maturity acceleration on the Credit Facility constitutes an event of default under certain of our other debt and derivative instruments. If such acceleration were to occur, we would not have sufficient liquidity available to repay the indebtedness. We would likely have to seek an amendment under the Credit Facility for relief from the financial covenant or repay the debt with proceeds from the issuance of new debt or equity, or asset sales, if necessary. We may be unable to amend the Credit Facility or raise sufficient capital to repay such obligations in the event the maturity is accelerated.
Commercial Paper Program
In May 2022, we entered into a commercial paper program for the issuance and sale of unsecured commercial paper in an aggregate principal amount not to exceed $500 million outstanding at any one time (the Commercial Paper Cap). In August 2022, the Commercial Paper Cap was increased to $1.0 billion, and in October 2023, was increased to $1.5 billion. The weighted average interest rate for borrowings outstanding as of December 31, 2025 was 4.044%. The weighted average interest rate for borrowings outstanding as of December 31, 2024 was 4.646%.
We had $1.0 billion and $477 million principal value of commercial paper issued and outstanding under the program as of December 31, 2025 and 2024, respectively. In the event of a failed re-borrowing, we currently have availability under our Credit Facility to fund amounts currently borrowed under the commercial paper program until they are re-borrowed successfully. Accordingly, we have classified these borrowings as long-term in our consolidated balance sheet as of December 31, 2025 and 2024, respectively.
Senior Notes and Debentures
In June 2024, we issued $400 million of 5.000% senior notes due 2029 and $500 million of 5.200% senior notes due 2034. We used the proceeds from the June 2024 notes issuance for general corporate purposes, including the repayment of a portion of amounts outstanding under the Commercial Paper Program and the Credit Facility; and repayment of all amounts then outstanding under the Uncommitted Credit Facility and certain other debt obligations.
In March 2025, we issued $500 million of 4.750% senior notes due 2030 and $700 million of 5.150% senior notes due 2035. We used the proceeds from the March 2025 notes issuance for general corporate purposes, including the repayment of a portion of amounts outstanding on our Credit Facility and a portion of outstanding borrowings under the Commercial Paper Program.
Our senior notes and debentures are general unsecured and unsubordinated obligations and rank equally with our other unsecured obligations.
Tax-Exempt Financings
As of both December 31, 2025 and December 31, 2024 we had $1.4 billion of tax-exempt financings outstanding with maturities ranging from 2026 to 2054 for both periods.
In June 2024, the Mission Economic Development Corporation issued, for our benefit, $50 million in principal amount of Solid Waste Disposal Revenue Bonds. The proceeds from the issuance, after deferred issuance costs, were used to fund the acquisition, construction, improvement, installation, and/or equipping of certain solid waste disposal facilities located within Texas.
In March 2024, the California Municipal Finance Authority issued, for our benefit, $100 million in principal amount of Solid Waste Disposal Revenue Bonds. The proceeds from the issuance, after deferred issuance costs, were used to fund the acquisition, construction, improvement, installation, and/or equipping of certain solid waste disposal facilities located within California.
We have $250 million of tax-exempt financings that have an initial remarketing period of 10 years. Our remaining tax-exempt financings are remarketed either quarterly or semiannually by remarketing agents to effectively maintain a variable yield. The holders of the bonds can put them back to the remarketing agents at the end of each interest period. If the remarketing agents are unable to remarket our bonds, the remarketing agents can put the bonds to us. In the event of a failed remarketing, we currently have availability under our Credit Facility to fund these bonds until they are remarketed successfully. Accordingly, we classified these borrowings as long-term in our consolidated balance sheets as of December 31, 2025 and December 31, 2024.
Finance Leases and Other
As of December 31, 2025, we had finance lease liabilities and other debt obligations of $441 million with maturities ranging from 2026 to 2063. As of December 31, 2024, we had finance lease liabilities and other debt obligations of $315 million with maturities ranging from 2025 to 2063.
In our consolidated balance sheet as of December 31, 2025, finance leases and other included $148 million related to construction costs for our corporate office building located in Phoenix, Arizona, which has been accounted for as a financing obligation. The amount is recorded within long-term debt, net of current maturities.
Credit Ratings
Our continued access to the debt capital markets and to new financing facilities, as well as our borrowing costs, depend on multiple factors, including market conditions, our operating performance and maintaining strong credit ratings. As of December 31, 2025, our credit ratings were A- by Standard & Poor’s Ratings Services, A- by Fitch Ratings, Inc. and A3 by Moody’s Investors Service, Inc. If our credit ratings were downgraded, especially any downgrade to below investment grade, our ability to access the debt markets with the same flexibility that we have experienced historically, our cost of funds and other terms for new debt issuances could be adversely impacted.
Off-Balance Sheet Arrangements
We have no off-balance sheet debt or similar obligations, other than short-term operating leases and financial assurances, which are not classified as debt. We have no transactions or obligations with related parties that are not disclosed, consolidated into or reflected in our reported financial position or results of operations. We have not guaranteed any third-party debt.
Seasonality and Severe Weather
Our operations can be adversely affected by periods of inclement or severe weather, which could increase the volume of waste collected under our existing contracts (without corresponding compensation), delay the collection and disposal of waste, reduce the volume of waste delivered to our disposal sites, or delay the construction or expansion of our landfills and other facilities. Our operations also can be favorably affected by severe weather, which could increase the volume of waste in situations where we are able to charge for our additional services.
Contingencies
For a description of our commitments and contingencies, see Note 8, Landfill and Environmental Costs , Note 11, Income Taxes and Note 18, Commitments and Contingencies , to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Financial Assurance
We must provide financial assurance to governmental agencies and a variety of other entities under applicable environmental regulations relating to our landfill operations for capping, closure and post-closure costs, and related to our performance under certain collection, landfill and transfer station contracts. We satisfy these financial assurance requirements by providing surety bonds, letters of credit, or insurance policies (Financial Assurance Instruments), or trust deposits, which are included in restricted cash and marketable securities and other assets in our consolidated balance sheets. The amount of the financial assurance requirements for capping, closure and post-closure costs is determined by applicable state environmental regulations. The financial assurance requirements for capping, closure and post-closure costs may be associated with a portion of the landfill or the entire landfill. Generally, states require a third-party engineering specialist to determine the estimated capping, closure and post-closure costs that are used to determine the required amount of financial assurance for a landfill. The amount of financial assurance required can, and generally will, differ from the obligation determined and recorded under U.S. GAAP. The amount of the financial assurance requirements related to contract performance varies by contract. Additionally, we must provide financial assurance for our insurance program and collateral for certain performance obligations. We do not expect a material increase in financial assurance requirements during 2026, although the mix of Financial Assurance Instruments may change.
These Financial Assurance Instruments are issued in the normal course of business and are not classified as indebtedness. Because we currently have no liability for the Financial Assurance Instruments, they are not reflected in our consolidated balance sheets; however, we record capping, closure and post-closure liabilities and insurance liabilities as they are incurred.
Critical Accounting Judgments and Estimates
Our consolidated financial statements have been prepared in accordance with U.S. GAAP and necessarily include certain estimates and judgments made by management. The following is a list of accounting policies that we believe are the most critical in understanding our consolidated financial position, results of operations and cash flows and that may require management to make subjective or complex judgments about matters that are inherently uncertain. Our critical accounting estimates are those estimates that involve a significant level of uncertainty at the time the estimate was made, and changes in them have had or are reasonably likely to have a material effect on our financial condition or results of operations. Accordingly, actual results could differ materially from our estimates. We base our estimates on past experience and other assumptions that
we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Such critical accounting policies, estimates and judgments are applicable to all of our operating segments.
We have noted examples of the estimates that are subject to uncertainty in the accounting for these areas below.
Landfill Development Asset Depletion
Landfill depletion expense for the years ended December 31, 2025 and 2024 was $433 million and $408 million, respectively.
To match the expense related to the landfill asset with the revenue generated by the landfill operations, we amortize the landfill development asset over its operating life on a per-ton basis as waste is accepted at the landfill. The landfill asset is fully depleted at the end of a landfill’s operating life. The per-ton rate is calculated by dividing the sum of the landfill development asset net book value plus estimated future development costs for the landfill, by the landfill’s estimated remaining permitted and probable disposal capacity. The expected future development costs are not inflated or discounted, but rather expressed in nominal dollars. This rate is applied to each ton accepted at the landfill to arrive at depletion expense for the period.
The calculation of depletion expense includes certain estimates and assumptions around future landfill development costs and remaining permitted and probable landfill disposal capacity. Changes in these estimates are subject to uncertainty attributable to the following factors: (i) actual future costs of construction materials and third-party labor could differ from the costs we have estimated because of the level of demand and the availability of the required materials and labor, and (ii) technical designs could be altered due to unexpected operating conditions, regulatory changes or legislative changes.
On at least an annual basis, we update the estimates of future development costs and remaining disposal capacity for each landfill. These costs and disposal capacity estimates are reviewed and approved by senior operations management annually. Changes in cost estimates and disposal capacity are reflected prospectively in the landfill depletion rates that are updated annually.
Landfill Asset Retirement Obligations
We have two types of retirement obligations related to landfills: (1) capping and (2) closure and post-closure. As of December 31, 2025 and 2024, our asset retirement obligations related to capping, closure and post-closure were $2.3 billion and $2.1 billion, respectively. Changes in these estimates may be sensitive to the following factors: (i) changes to environmental laws and regulations and/or circumstances affecting our operations could result in a significant change to our estimates, which could have a significant impact on our result of operations, (ii) we do not expect to incur most of these costs for a number of years, which requires us to estimate the timing of projected cash flows and make assumptions regarding inflation rates, and (iii) actual future costs of materials and third-party labor could differ from the costs we have estimated because of the level of demand and the availability of the required materials and labor.
Obligations associated with final capping activities that occur during the operating life of the landfill are recognized on a units-of-consumption basis as airspace is consumed within each discrete capping event. Obligations related to closure and post-closure activities that occur after the landfill has ceased operations are recognized on a units-of-consumption basis as airspace is consumed throughout the entire life of the landfill. Landfill retirement obligations are capitalized as the related liabilities are recognized and amortized using the units-of-consumption method over the airspace consumed within the capping event or the airspace consumed within the entire landfill, depending on the nature of the obligation. Landfill amortization expense for the years ended December 31, 2025 and 2024 was $114 million and $106 million, respectively. All obligations are initially measured at estimated fair value. Fair value is calculated on a present value basis using an inflation rate and our credit-adjusted, risk-free rate in effect at the time the liabilities were incurred. Future costs for final capping, closure and post-closure are developed at least annually by engineers, and are inflated to future value using estimated future payment dates and inflation rate projections.
Landfill capping. As individual areas within each landfill reach capacity, we must cap and close the areas in accordance with the landfill site permit. These requirements are detailed in each landfill's technical design, which is reviewed and approved by the regulatory agency issuing the landfill site permit.
Closure and post-closure. Closure costs are costs incurred after a landfill stops receiving waste, but prior to being certified as closed. After the entire landfill has reached capacity and is certified closed, we must continue to maintain and monitor the site for a post-closure period, which generally extends for 30 years. Costs associated with closure and post-closure requirements generally include maintenance of the site, the monitoring of methane gas collection systems and groundwater systems and other activities that occur after the site has ceased accepting waste. Costs associated with post-closure monitoring generally include groundwater sampling, analysis and statistical reports, third-party labor associated with gas system operations and maintenance and transportation and disposal of leachate.
Landfill retirement obligation liabilities and assets. Estimates of the total future costs required to cap, close and monitor each landfill as specified by the landfill permit are updated annually. The estimates include inflation, the specific timing of future
cash outflows and the anticipated waste flow into the capping events. Our cost estimates are inflated to the period of performance using an estimated inflation rate, which is updated annually. For the years ended December 31, 2025 and 2024, our estimated inflation rate of 2.0% was based on the twenty year average core consumer price index.
The present value of the remaining capping costs for specific capping events and the remaining closure and post-closure costs for each landfill are recorded as incurred on a per-ton basis. These liabilities are incurred as disposal capacity is consumed at the landfill.
Retirement obligations are increased each year to reflect the passage of time by accreting the balance at the weighted average credit-adjusted risk-free rate that was used to calculate each layer of the recorded liabilities. This accretion is charged to operating expenses. Actual cash expenditures reduce the asset retirement obligation liabilities as they are made.
Corresponding retirement obligation assets are recorded for the same value as the additions to the capping, closure and post-closure liabilities. The retirement obligation assets are amortized to expense on a per-ton basis as disposal capacity is consumed. The per-ton rate is calculated by dividing the sum of each of the recorded retirement obligation asset’s net book value and expected future additions to the retirement obligation asset by the remaining disposal capacity. A per-ton rate is determined for each separate capping event based on the disposal capacity relating to that event. Closure and post-closure per-ton rates are based on the total disposal capacity of the landfill.
Changes in these estimates may be sensitive to the following factors: (i) changes to environmental laws and regulations and/or circumstances affecting our operations could result in a significant change to our estimates, which could have a significant impact on our result of operations, (ii) we do not expect to incur most of these costs for a number of years, which requires us to estimate the timing of projected cash flows and make assumptions regarding inflation rates, and (iii) actual future costs of materials and third-party labor could differ from the costs we have estimated because of the level of demand and the availability of the required materials and labor.
On an annual basis, we update our estimates of future capping, closure and post-closure costs and of future disposal capacity for each landfill. Revisions in estimates of our costs or timing of expenditures are recognized immediately as increases or decreases to the capping, closure and post-closure liabilities and the corresponding retirement obligation assets. Changes in the assets result in changes to the amortization rates which are applied prospectively, except for fully incurred capping events and closed landfills, where the changes are recorded immediately in results of operations since the associated disposal capacity has already been consumed.
Total landfill depletion and amortization expense for the years ended December 31, 2025 and 2024 was $547 million and $514 million, respectively. See our Results of Operations section in this Management's Discussion and Analysis of Financial Condition and Results of Operations for discussion on changes to our landfill depletion and amortization.
Environmental Liabilities
We are subject to an array of laws and regulations relating to the protection of the environment, and we remediate sites in the ordinary course of our business. Under current laws and regulations, we may be responsible for environmental remediation at sites that we either own or operate, including sites that we have acquired, or sites where we have (or a company that we have acquired has) delivered waste. Our environmental remediation liabilities primarily include costs associated with remediating groundwater, surface water and soil contamination, as well as controlling and containing methane gas migration. To estimate our ultimate liability at these sites, we evaluate several factors, including the nature and extent of contamination at each identified site, the required remediation methods, timing of expenditures, the apportionment of responsibility among the potentially responsible parties and the financial viability of those parties.
We accrue for costs associated with environmental remediation obligations when such costs are probable and reasonably estimable in accordance with accounting for loss contingencies. We periodically review the status of all environmental matters and update our estimates of the likelihood of and future expenditures for remediation as necessary. Changes in the liabilities resulting from these reviews are recognized currently in earnings in the period in which the adjustment is known. Adjustments to estimates are reasonably possible in the near term and may result in changes to recorded amounts. With the exception of those obligations assumed in certain business combinations, environmental obligations are recorded on an undiscounted basis. Environmental obligations assumed in certain business combinations are initially estimated on a discounted basis, and accreted to full value over time through charges to interest expense. Adjustments arising from changes in amounts and timing of estimated costs and settlements may result in increases or decreases in these obligations and are calculated on a discounted basis as they were initially estimated on a discounted basis. These adjustments are charged to operating income when they are known. We perform a comprehensive review of our environmental obligations annually and also review changes in facts and circumstances associated with these obligations at least quarterly. See our Results of Operations section in this Management's Discussion and Analysis of Financial Condition and Results of Operations for discussion on our remediation adjustments. We have not reduced the liabilities we have recorded for recoveries from other potentially responsible parties or insurance companies.
As of December 31, 2025 and 2024, we had $443 million and $447 million of environmental liabilities, respectively. Changes in these estimates may be sensitive to changes in cost estimates, timing of estimated costs and settlements, inflation and applicable regulations. Our estimates of these liabilities require assumptions about uncertain future events, which may change the ultimate amounts of our environmental remediation liabilities. Thus, our estimates could change substantially as additional information becomes available regarding the nature or extent of contamination, the required remediation methods, timing of expenditures, the final apportionment of responsibility among the potentially responsible parties identified, the financial viability of those parties and the actions of governmental agencies or private parties with interests in the matter. The actual environmental costs may exceed our current and future accruals for these costs, and any adjustments could be material.
New Accounting Standards
For a description of new accounting standards that may affect us, see Note 2, Summary of Significant Accounting Policies , of the notes to our audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
