GFL Environmental Reports Record Margins and Leverage Improvement, Sets Strong 2026 Guidance

What happened

GFL Environmental announced Q4 and full-year 2025 results that exceeded expectations, with revenue, Adjusted EBITDA, and Adjusted Free Cash Flow all ahead of forecasts. The company achieved a record Q4 Adjusted EBITDA margin of 30.2%, contributing to a full-year margin of 30.0% for the first time in its history. Net leverage was reduced to 3.4x, the lowest year-end level ever, supported by strong cash flow and $3.0 billion in share repurchases representing over 10% of shares. For 2026, guidance projects 8% revenue growth, 10% Adjusted EBITDA growth, and 14% Adjusted Free Cash Flow growth, excluding potential acquisitions. This performance underscores GFL's execution in its simplified solid-waste model post the Environmental Services carve-out, aligning with strategic focus on core operations.

Implication

The earnings report validates the DeepValue thesis of a delevered platform with robust cash generation, as net leverage hit a record low and Adjusted Free Cash Flow grew by 23.6%. Margin expansion to 30.0% supports the focus on solid waste fundamentals, though it is slightly below the 32.9% solid waste margin in 2024, indicating potential mix effects or integration challenges. Significant share repurchases demonstrate disciplined capital allocation, enhancing shareholder returns and aligning with the strategy of balanced capital deployment post-carve-out. However, the 2026 guidance excludes M&A contributions, suggesting reliance on organic growth, and investors must watch for acquisition returns and integration to avoid over-optimism. Overall, while the positive data strengthens the BUY stance, continued vigilance on margin durability, leverage maintenance, and commodity exposure is essential as per the watch items.

Thesis delta

The earnings report strongly reinforces the BUY thesis by demonstrating continued deleveraging, margin resilience, and robust cash flow generation. However, the slight dip in full-year margin compared to the solid waste margin peak in 2024 warrants monitoring to ensure pricing power and operational efficiency are sustained. No major shift in stance is indicated, but the positive guidance adds confidence to the multi-year FCF growth narrative.