EPS (adjusted) of 22c missed estimates of 22.6c. Revenue of $1.98B matched estimates. GFL's results and guidance reflect its transition into a more-profitable, less-levered company focused on solid waste. Revenue was driven by price and volume gains in Solid Waste, offsetting a drop in recycled commodity prices and lower cleanup work in Environmental Services (ES). Adjusted Ebitda margin expanded in both segments, reflecting the company's pricing emphasis and recent divestitures. Guidance for 2025 sees mid- to high-single-digit revenue growth and 100 bps of Ebitda margin growth, including ES, which is being divested. Adjusted free cash flow met consensus but fell from a year ago due to increased capital investments. Net leverage fell below 4x and will approach 3x following the ES unit sale, which positions the company to reaccelerate M&A and initiate an opportunistic buyback program. Profitability is expected to be high over the next two years, with growth in the 20% range (based on estimates). The stock is not cheap, but gets a premium for its consistency. We would be OK buying a small position but would prefer a lower valuation (it is 53X earnings).
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