Republic Services (RSG) Q2 2026 earnings call transcript

Good afternoon. I would like to welcome everyone to Republic Services' second quarter 2026 conference call. John VanderArk, our CEO, and Brian DelGaccio, our CFO, are on the call today to discuss our performance. I'd like to take a moment to remind everyone that some information we discussed on today's call contains forward-looking statements, including forward-looking financial information, which may involve risk and uncertainties and may be materially different from actual results.

Our SEC filings discuss factors that could cause actual results to differ materially from expectations. The material that we discussed today is time-sensitive. If, in the future, you listen to a rebroadcast or recording of this conference call, you should be sensitive to the date of the original call, which is August 6, 2026.

Please note that this call is the property of Republic Services, Inc. Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of Republic Services is strictly prohibited. Our SEC filings, our earnings press release, which includes gap reconciliation tables and a discussion of business activities, along with a recording of this call, are available on Republic's website at republicservices. com.

In addition, Republic's management team routinely participates in investor conferences. When events are scheduled, the dates, times, and presentations are posted on our investor website. With that, I'd like to turn the call over to John.

Thanks, John. Good afternoon, everyone, and thank you for joining us. Our strong second quarter results reflect the resilience of our business model and consistent operational execution. We delivered solid growth on both the top and bottom lines. At the same time, we continued investing in technology, automation, and customer-focused solutions that strengthen our competitive position, improve the customer experience, and enhance long-term profitability. During the quarter, we achieved revenue growth of 4.6% and generated adjusted EBITDA growth of 4.5%. We maintained adjusted EBITDA margin at 32.1% and overcame headwinds associated with event-driven landfill volumes received in the prior year.

We delivered adjusted earnings per share of $1.85 and produced $1.58 billion of adjusted free cash flow on a year-to-date basis. Our focus on delivering world-class essential services continues to support organic growth and enhance customer loyalty. With respect to customer zeal, our customer retention rate remains strong at more than 94%. We continue to see favorable net promoter scores due to the value of our offerings and quality of our service delivery.

Organic revenue growth during the second quarter was driven by strong pricing across the business. Average yield on total revenue was 3.4%, and average yield on related revenue was 4%. This level of pricing exceeded our cost inflation, which drove margin expansion in the underlying business.

Organic volume was down 1.9% on related revenue, or 1.6% on total revenue. This level of performance was expected, with 1.3% of the decline in total revenue associated with landfill event volumes received in the prior year.

Aside from the tough prior year comp, volume performance improved 50 basis points from the first quarter. Organic revenue in the environmental solutions business decreased total revenue by 20 basis points in the second quarter, which was in line with our expectations. Our environmental solutions sales pipeline continues to build with increased activity across multiple end markets. We continue to expect year-over-year revenue growth in this business in the second half of the year.

Turning to digital, our investments in technology and AI are advancing. Over time, these capabilities are expected to drive additional growth and support continued operating leverage. We're actively deploying AI-based predictive technology that supports optimized pricing decisions across markets with varying customer and competitive dynamics. This approach is expected to reinforce price retention and reduce customer attrition over time.

Enhancements to our RISE digital platform are progressing, with initial deployment focused on the large container business. The integration of AI and advanced routing algorithms is expected to improve safety outcomes, strengthen service execution, and increase route efficiency. Early pilots confirmed the expected value from this initiative.

Activation of digital tools in our call centers are enhancing the customer experience and unlocking value in our business by optimizing the 11 million inbound calls we receive each year.

Moving on to sustainability. Last week, we released our latest sustainability report, highlighting the meaningful progress we are making toward our 2030 goals and the positive impact we are delivering for our customers and communities. Our suite of sustainability reports and materials is available on our website. We continue to believe that our investments in plastic circularity and decarbonization position us for profitable growth and long-term value creation. Production volume continues to increase across our polymer center network as we optimize processing operations. Construction at a third polymer center in Allentown, Pennsylvania is progressing. Facility commissioning is planned to begin early next year. We continue to advance renewable natural gas projects with our partners. We commenced operations at two RNG projects during the second quarter and expect two additional projects to begin operations by year end.

We made further progress on our commitment to fleet electrification. We had more than 250 electric collection vehicles in operation at the end of the second quarter. We expect to exit this year with more than 300 EV collection trucks in our fleet, and we'll continue to grow this differentiated service offering. As part of our approach to sustainability, we strive to be the employer where the best people want to work.

We continue to see high employee engagement scores, and our turnover rate is the lowest on record. With respect to capital allocation, we invested $860 million in strategic acquisitions in the first half of the year. Our acquisition pipeline remains supportive of continued activity in both the recycling and waste and environmental solutions businesses. We expect to invest more than $1.2 billion in value-creating acquisitions in 2026.

During the first half of the year, we returned more than a billion dollars to shareholders through dividends and the repurchase of approximately 1% of our outstanding shares. Additionally, we recently announced an increase to the dividend for the 23rd consecutive year.

Building on the strong results delivered through the first half of the year and continued momentum we see across the business, we raised our full-year 2026 guidance as follows. Revenue is expected to be in the range of $17.2 billion to $17.3 billion.

Adjusted EBITDA is expected to be in a range of $5.525 billion to $5.55 billion. Adjusted earnings per share is expected to be in the range of $7.23 to $7.28. And adjusted free cash flow is expected to be in a range of $2.54 billion to $2.575 billion. Our full-year guidance incorporates higher-than-expected fuel recovery fee revenue through July, increased recycling commodity revenue based on current prices, and the contribution of acquisitions close to date. I will now turn the call over to Brian, who will provide details on the quarter.

Thanks, John. Core price on total revenue was 5.3%. Core price on related revenue was 6.4%, which included open market pricing of 7.8% and restricted pricing of 4.1%. The components of core price on related revenue included small container of 8.1%, large container of 6.9%, and residential of 6.3%. Average yield on total revenue was 3.4%, and average yield on related revenue was 4%. Additionally, fuel recovery fees increased total revenue by 1.8%, which offset higher fuel expense and related surcharges.

Second quarter volume decreased total revenue by 1.6% and related revenue by 1.9%. Most of the decline was due to the event-driven landfill volumes in the prior year. Volume performance on related revenue also included a 1.1% increase in landfill MSW. This was more than offset by large container volumes, which declined 2.2%, primarily due to continued softness in construction-related activity, residential volume, which declined 4.3% due to known contract losses, and landfill special waste, which declined 30 basis points. It's important to note that landfill special waste increased 10.7%, excluding the tough comp from wildfire volumes received in the prior year.

Moving on to recycling. Commodity prices were $136 per ton during the second quarter. This compared to $149 per ton in the prior year. Recycling processing and commodity sales increased by $8 million during the quarter. Increased volumes at our polymer centers offset lower recycled commodity prices. Current commodity prices are approximately $140 per ton. This is the basis used for the second half of the year in our updated guidance.

This would imply a full-year average commodity price of approximately $135 per ton. Total company adjusted EBITDA margin was 32.1%. Margin performance during the quarter included, margin expansion in the underlying business of 90 basis points, which was offset by a 50 basis point decrease from landfill event volumes, a 30 basis point decrease from net fuel, and a 10 basis point decrease from recycled commodity prices. With respect to environmental solutions, second quarter revenue increased $53 million sequentially, driven by higher event volumes and additional seasonal activity across the business.

Adjusted EBITDA margin in the environmental solutions business was 20.2%. percent, a sequential improvement of 100 basis points. Year-to-date, adjusted free cash flow was $1.58 billion. Our performance was driven primarily by EBITDA growth in the business.

Total debt was $14.2 billion, and total liquidity was $2.8 billion. Our leverage ratio at the end of the quarter was approximately 2.6 times. With respect to taxes, our combined tax rate and impact from equity investments in renewable energy resulted in an equivalent tax impact of 23.8% during the quarter. We now expect an equivalent tax impact of approximately 24.5% for the year.

With that, operator, I would like to open the call to questions.

Yes, when you look at the increase of the $40 million or so in EBITDA, majority of that is just due to increasing commodity prices. So if you look at both the revenue and the related EBITDA, that's about $25 million, and then the rest is due to the contribution from incremental acquisitions. So, if you look at the revenue that's increasing, you've also got the increase from fuel recovery fees, but that is mostly offset by fuel costs as well as related surcharges.

Yeah, so Q3, think of it relatively flattish with the prior year with margin expansion in the fourth quarter.

Yeah, thank you for noticing. That's our number one priority and value, and I think it's a mix of things. We've always had a very good safety culture and very good at training, prioritizing on the front line. I think the big increases have really been technology. We've put a lot of equipment into vehicles, and it's not just the camera, the technology. it's also the coaching and training around it. That system has really been encouraging. And I'd say our next frontier is really to use AI in that capacity and think about analytics and understand what types of environments create unsafe opportunities and how do you then create management actions and systems and tools and processes around it So I think we got more room to run on that We don't take it for granted.

We wake up every day and try to keep all 42,000 colleagues safe, but we're making great progress.

Yeah, so if you take a look at the performance in environmental solutions, we saw an increase in emergency response jobs year over year, which was partially offset by a reduction in landfill times. And again, we are just slightly down on a year over year basis, but we saw sequential improvement each of the months throughout the second quarter.

And we're optimistic. And again, we project that we're going to grow from a top-line perspective as well as related margin expansion in the second half of the year.

Yeah, maybe think, start with market. We're coming out of a period of nearly four years of negative growth in recycling and waste. that's really been driven by industrial and construction or lack thereof in terms of activity. And I think we're now in a market that's sequentially improving. I would think of it more flat with encouraging science month over month. And in that context, we're obviously losing a little bit of share in residential, and we're gaining some share in industrial and small container, which will take all day long if we can make that mix change. You'll see residential, the rate of decline, certainly start to narrow as we get into 27.

And listen, we don't aspire to lose or shrink in that category, but we're always going to take price over volume, and we're going to continue to get a fair return on the hard work that our people do and the assets we invest. And if we need to continue to slightly prune in order to find more value there, we're going to do it.

Yeah, I think AI is going to transform us broadly across the business, and we're using or experimenting with it almost everywhere. We talked about the three major areas that we're going deep, and there's a few other ones that we'll add to the list over time in terms of investing at scale across the enterprise. On pricing specifically, it's understanding the specific price that you want to give to a customer that both maximizes value in the short term but also the long term.

So you could price more, but then if you're going to drive defection, that's not a very good long-term tradeoff. And so this now takes in dozens of variables about the customer, and each customer has their own fingerprint in terms of the service history and background and size and scale and location. and so we're able to put all of those variables in to really get a precise, optimized price that maximizes long-term value. We've always done analytics, but this is totally, I would say, an order of magnitude, different level of sophistication.

Yeah, the pipeline is certainly strong, and how many of those things close in the back half of the year versus pushing to the first part of next year. We'll expect to have another strong year next year. We'll probably give a relatively conservative guide because they never want the team to chase an M&A number because you can easily hit that and not get the returns that we expect. but everything we see going forward, that pipeline looks strong and continues to build both in the short and the medium term.

I would say, look, the components of organic growth, the price, the volume, and then obviously the related inflationary costs are all coming relatively in line with our initial expectations. So most of the update to the guide, again, was due to, as I mentioned earlier, the increase in fuel recovery fees, due to just increased diesel costs, the incremental acquisitions. So we came into the year thinking we had about 70 basis points of contribution to top-line growth due to both rollover as well as the in-year deals. Now that's 100, as well as then the increase in commodity prices, moving from $115 per ton to $135.

I'll turn it over.

Yeah, we still have the continuation of the landfill event volumes in the prior year, so that's about a 40 basis point headwind. We also, just because of the timing of the acquisitions themselves, when we look at the integration costs that we expect to incur, most of that's going to happen in the third and fourth quarter, which is a headwind. But again, when you take a look at the overall performance, we expect the underlying business to continue to remain strong and the margin expansion in the underlying business, such that when you take a look at what we expect for the full year, we're looking at 60 to 70 basis points of margin expansion in the underlying business.

Yeah, I think, like I talked about, this has been a negative market in recycling waste for almost four years, driven by construction and industrial activity. What's changing is I'd say commercial construction, we're starting to see slight rebound. I'd still say it's depressed overall, but slight rebound. Residential construction is still very challenged. And on the industrial activity, that's where you're starting to see more momentum. And you can see that with the PMI prints that are over 50 for the last five months and starting to accelerate. And we just see that with service changes with our large container customers. So that's where we're seeing some volume lift. So special waste, take out the comp from last year and the wildfire, and that looks good.

It's a market that is slightly improving. I think there's still plenty of caution from a geopolitical environment with oil prices and other things. So we have a positive outlook, but we're still waiting and seeing for this economy, I would say, fully fire.

Yeah, you are correct. So on the fuel recovery fees, we took what we knew through the month of July, right? So fuel prices have been highly volatile, so we didn't want to assume that they would remain elevated than to just have them come down. And now you're talking about a revenue change because of that assumption. So we took August through the end of the year back to our original assumption, which was just below $4 a gallon from a cost per gallon perspective on diesel.

And I'm sorry, on your first question?

Yeah, so through today, we've closed just shy of $1.2 billion of investment in acquisitions, all of which is included in the guides for the full year.

Yeah, if you think about pricing over time, listen, fuel skyrocketed, and that becomes a meaningful portion of our customers' bills. So this is where AI helps us to think about the optimization of that and making sure we're playing a long-term game. So probably went out with, you know, balancing for a couple months a little less gross price than would have in another environment. I don't see the pricing environment changing broadly, which is we're pricing ahead of our cost structure. I think even in a challenge industry period, I think industry conduct around structure around price, right, has maintained pretty good discipline for my seat in the park. And now you see units starting to come back that will be very positive.

And then with respect to AI, I think this is true of almost any AI investment. It's almost always a scale investment. And so when you do routing, whether you roll that across 100 routes, 1,000 routes, or 10,000 routes, you've got to do the same underlying work. Same thing with customers. Whether you do that across 2,000 customers or 2 million customers, you've got to do the same underlying work. So I think it will favor scale players who are able to invest in these tools.

And on the core price, we would expect it to stay near what we posted here in the second quarter. So in a range, call it 6-2 to 6-4 in that zip code.

Yeah, strong. I think, again, we did over $100 million last year, and we're going to exceed that number this year. We're well ahead of that pace, and we're seeing it across the full suite of our assets. So it's taking certainly utilizing our hazardous landfills and our water treatment capabilities, but it's also utilizing our solid waste landfills. So some of that special waste growth you see are jobs initiated through our environmental solutions team that are actually flowing through the recycling and waste P&L. And that's one of our advantages, given that we have a broad set of offerings for clients, that, you know, different levels of PFAS require different solutions. And for low levels, a subtitle D landfill is a, you know, is the most cost-effective solution.

And so we're taking advantage of that. And we think that pipeline is building. And so we will expect to, you know, comfortably beat our number again next year.

Yeah, we're starting to see that with some construction projects. I think it mostly been you know first it was talk and policy and now then it was planning and I think we now starting to see shovels in the ground and that will be good for us on both sides of the business certainly in that construction activity whether it remediating the dirt to prepare the construction site or the construction process itself, and then the ongoing service of those facilities across a range of end markets in the manufacturing space will be good, and that will be, I think, a tailwind for this business for five-plus years.

Yeah, some of this is just the – that's a natural effect of a declining inflationary environment, which we've seen over the last year, obviously, spiking because of oil in the last couple of months. But there's typically a 12-month lag between when inflation, a CPI would print, and then when you see that in a restricted business. And then the open market, we think about pricing relative to that context. overall. So that's why we talked about gross prices coming down, but our cost structure is also coming down. So we're maintaining that spread over time. And then in terms of price activity and markets, there are a handful of markets where you see low cost players come in and try to build up a book of revenue almost exclusively to sell that over time.

And that's distracting in a handful of markets, but that's really been true for the last 30 years in this business, and we do a good job of fiercely defending and making good price volume decisions there over time. Those players who then don't end up transacting pretty quickly figure out that their set of assumptions around cost of service higher than they expected, and those decisions oftentimes are not very profitable in the end.

Yeah, we feel very comfortable. That business is very well contracted, so we will have a seat in the table in that process, and we'll be assured that our contract rights are going to live going forward with whoever they transact that business to.

Yeah, that long-term aspiration certainly hasn't changed. We've got to operate in a broader context and market, so we're going to make the right price volume tradeoffs. And we talked about probably didn't get it perfect as demand dropped at the end of 24 and into 25. We probably were pursuing price more aggressively than we would have in retrospect.

I think as we go forward and build from here, you'll see us, you know, I think ahead of our enterprise 30 to 50 basis points of margin expansion, which you talk about a year, I think you'll see environmental solutions expand at a faster pace than that. exactly how fast. I think it'll be a little bit dictated by both competitive environment, but also the demand environment, right? And if industrial activity really starts to take another step up here, I think that will be very good for margin performance as well as growth.

Yeah, I don't think we'll be ahead of it in 2027. Over the long term, we certainly could. I think what we've learned both in pricing and in routing have confirmed our assumptions that that $100 million is on the table. The exact pace of rollout, I think, will certainly be trending toward that number in the end of 2027. The exact pace which we get it, we're going to make sure we get it and we stick it, right? Not make it an event, but make it an ongoing capability. And the tool part I don't worry about, it's, you know, for routing, for example, you've got to get drivers to drive a different route that's optimized. And that change is easier said than done.

You don't send out a memo and make that happen, you've got to work site by site. And that's a leadership opportunity that I'm confident will capture, but that will take us a little bit of time to make sure it's durable.

Yeah, very much. And this is kind of how we forecasted and talked about it, that we would see this leveling out in the second quarter, and that would be a base to build from. And this pipeline, some things happen right away like ER, but most of these things, you get a longer sales pipeline. So we can see into the fact that we'll have momentum into the second half, just like we saw in the back half of last year, what the results will be in the first half of this year.

Yeah, it's the normal seasonality of the business. And if you take a look, all years are somewhat like we pay proportionately less cash taxes in the first half of the year. And our CapEx tends to be more back end loaded. So this is consistent with what you've seen in prior periods. and it's right on top of our plan.

Yeah, so that sensitivity was the fuel recovery fees, and it was the direct impact of diesel fuel. We've talked about this, talked about it in the last quarter. There are other costs that we incur, transportation surcharges and other indirect expense charges that we get, as well as from an overall cash perspective, increased CapEx when you've got the increased oil prices for landfill liner, for example. So we try and recover from a comprehensive or a holistic perspective the cash impact of changes in diesel prices. And so we've expanded, and you'll see them when you see the 10Q expanded to include some of those other cost increases so that you get to a relatively neutral EBITDA impact from changes in diesel prices.

Yes. So you do see that. There is a lag, right? So again, we actually wound up having a net negative from a net fuel perspective in the first quarter. As you saw, diesel prices rise in the month of March, and we didn't start recovering those costs until April. So if you see fuel costs come down precipitously in the second half of the year, we could get that back. But it's really just a timing issue. It's not something that's sustained.

It was pretty slow for us last year, actually, And I'd say slightly on the pickup this year, but versus historic norm, yes. If you think about many years, there's kind of large, big jobs you can point to across a number of different providers, and we're just not seeing that level of kind of transformational type or big jobs that you would call out.

Yeah, we're not – so in total, if you just take a look at what we guided to through the acquisitions completed in the first quarter was that 70 basis points contribution. Again, that was a combination of rollover as well as in-year. If you take a look at what we just added in the second quarter, it was basically an additional 30 basis points of contribution to the top line.

That takes you to about the $1 billion. One of the deals that we include that we closed on here most recently was something where we already had a 50% ownership interest in. So as we complete that deal, when you see that flow through, we were already consolidating that entity. So there's no incremental revenue, but there will be incremental EBITDA.

Well, I think you have taken into consideration what's already happened through the first half of the year. So we had 50 basis points of margin expansion in the first quarter, relatively flat in the second. So year-to-date, you're a plus, call it 25. If you're flat in the third quarter, then that kind of squeezes out what you need in the fourth quarter to get to the overall year, which we're saying is in the 10 basis point zip code.

So the entire year's worth of margin expansion isn't coming in the fourth quarter. Some of it already came in the first.

Yeah, I think it's across Denmark. It's obviously anything manufacturing-related. It's probably about half of that business, probably, to find oil and gas and semiconductors and a range of different industries there. And our strongest value proposition is going to be an integrated offering where we can bring to bear field services, hazardous waste, landfills, solid waste landfills, water remediation, even hazardous liquids. We've got great partnerships on incineration. So the more complex and broad the job is, the more competitive we're going to be versus a single oil spill is going to be a pretty competitive environment where we're going to be less competitive in that space. So I'd say the pipeline is robust. It's not hanging on a single job or a single opportunity.

It's broad-based geographically and across the end markets.

No, it's consistent with what we originally guided to. So, this year, when you take a look at our entire sustainability portfolio, we're expecting about $40 million of incremental revenue with about $20 million of incremental EBITDA.

Yeah I mean I think when you think on the increment you in the zip code there of what we would expect to see on those incremental revenues in part when you think about the mix So as we get some more of the waste solutions which is that post centric type volumes they tend to carry a relatively higher margin, but also just eating into some of the capacity we have on the field and industrial services side.

No, we were consolidating it. So we had the revenue and then we were basically paying out the 50% interest through subcontract costs. Basically, we'll eliminate that subcontract cost line item.

Yes, a lot of that would be the increase in fuel. And we have fuel, they have fuel recovery mechanisms that we negotiate with them just like we have in our contracts. And to Brian's comment earlier, we've got a pretty good overall hedge. There's a little bit of lag and drag as fuel moves up and down. But when you think about direct fuel costs and then those indirect fuel costs, we feel pretty good about being covered across different fuel prices.

Yeah, the performance is exceeding our expectations. So obviously some learning curve when you get the first ones off the line of the factory, but that's true of any new vehicle. That doesn't have anything to do with the powertrain. The battery performance and uptime and things have been really, again, exceeding our expectations. And in terms of capacity, that's true largely when you retrofit a diesel truck. That's where you get too much weight with a battery and you start to take down payload and really limit the routes that that truck can cover. When you have a truck that designs studs up as an EV, that allows you to take out enough weight out of the vehicle where you're not sacrificing a lot of payload.

No. When you look at the components of the increase in revenue, again, the $150 million at the midpoint, approximately 1%, exclusively driven by increased fuel recovery fees due to the change in diesel prices, the incremental acquisitions for deals close to date, and then the increase in commodity prices. The combination of both price and volume are in line with our initial expectations.

I would say relatively consistent as a percent of revenue of what you're seeing in 2026.

Yeah, look, we've been really happy with the demand side of the polymer centers and that we could sell each of those out three or four times over and we're largely exceeding our pricing assumptions. We have the supply and so, you know, That was a strategic advantage and one of the reasons we got into it. From a learning standpoint, we were probably too optimistic on the timing in terms of how we could get to full capacity. Now, the good side is that when we hit full capacity, we're above our nameplate capacity. So we had originally talked about four polymer centers. We think we'd probably get there with three in the short to medium term just because we're getting more capacity out of those when they're running at full steam.

So we're excited about that over time. In terms of where we go next, anything that goes into a landfill, we're going to challenge. Landfill ultimately is a cost, and we would rather take volume out of that and get a second life and a second revenue stream for that. And that allows us to extend the life of landfills, which in many urban areas, we're running out of airspace, and the industry is. So parts of New England and coastal California and other places, if you can get an extra five, six, seven, ten years in those landfills, that's enormously valuable while getting a second revenue stream. So organic material, flexible packaging, those are all things that we're taking a look at.

And we'll make sure that both it's going to be environmentally sustainable but economically sustainable. It's got to have a return for us to invest.

I would say only on the margin. What you see is if you're going to grow, you're going to take on new units that are below your portfolio average, and so nominally that would put lower pressure on yield. So we'll probably end up more to the lower side of our yield guidance because we're doing slightly better on volume. Same thing with service increases. you're going to see service increases come in at a slightly lower rate, which can put downward pressure on yield. But those are all additional activities which are good for the business overall, and that's why you see the margin being strong, because we've still got a good overall price cost spread.

Yeah, we're more excited about that business today than we were when we purchased U. S. Ecology four years ago, and we've substantially exceeded the pro forma and driven really good returns for our shareholders there. You know, I think we've probably underestimated the challenge of integration of some legacy assets that both we had as well as legacy U. S. Ecology had in getting the systems and tools and processes put together.

And we're playing a long game, so we're going to, you know, make the right decision for the long term, even if that sacrifices some short-term performance. We haven't gotten it always perfect in the commercial side in terms of price volume, but I think that team keeps learning and growing. And on balance, if you look at the progress, you're taking a business that had, you know, in the 14%, 15% EBITDA margin and made substantial improvement. And I think that improvement going forward won't be a straight line.

Nothing that you're building ever is going to be perfect. It's not a mature business yet, but the upward path is to the up and to the right on the margin standpoint. And, again, we're very excited about both the top and bottom line prospects of that business.

I think automation and AI will impact everything we do. I expect that to matriculate. It already is, matriculating into our vehicles and into our heavy equipment. I think the idea of getting to autonomy at scale, a truck driving down the road or operating at a landfill truly autonomous, you could do it. I'm not sure that there's going to be substantial cost savings because in the end somebody is likely going to be programming or driving that, so you're not going to see a huge labor arbitrage in that part of the business.

But if you look at other parts of the business in recycling centers, the more technology we put in, I mean, we have a fraction of the employees that we did a decade ago in many of our recycling centers through robots and automation. And so I think that we'll continue to invest and grow there. But automation, just like everything else we do, has got to have a return. We've got to make sure that we're solving a problem and not just automating for automation's sake.

Yeah, we would expect sequential improvement in the volume performance. still negative, but, you know, in the, you know, call it three to three and a half percent range in the second half of the year. And then that moving in 27 at this point, probably still down, you know, circa 2%, you know, based on what we expect right now. But as we've talked about the other lines of business, small container, permanent, large container, the landfill MSW, we're seeing those improve, which will, you know, again, when you take a look at the total volume performance, we would expect total company volume performance to sequentially improve quarter on quarter from here on out.

Yeah, obviously, there's been a lot of dialogue at both the federal and state level about PFAS. and we are very active and engaged in those conversations. We're not opposed to regulation, but it's got to be sensible regulation. And what we are opposed to is, you know, blaming a landfill for all the inbound volume that contains PFAS. You know, PFAS is pervasive, and so it shows up in every landfill because it's in all types of waste streams. And penalizing the landfill we think is the wrong solution, we're actually the right point to remediate that because we're capturing that leachate and we're able to treat it in many cases, pretreat it in some cases, discharge it, and work with our utility partners at the local level to make sure that we have the right solution.

So I'd say it's something we're mindful of. We're in state capitals. We're in federal capitals. But it isn't something I think is a fundamental risk to the business. We will manage through this just like all the regulation the industry has done in the past.

Thank you, Nick. As we close today's call, I want to thank the entire Republic Services team. Their dedication to our customers and communities continues to strengthen our business and differentiate Republic in the marketplace. I'm proud of what we've accomplished in the first half of the year and confident in our ability to build on this momentum as we continue creating long-term value for our customers, employees, and shareholders. Have a good evening and be safe.