GFL Environmental NYSE: GFL raised its full-year 2026 outlook for the second time after reporting second-quarter results that management said exceeded expectations, supported by pricing gains, acquisition activity and operating efficiencies despite softer construction and demolition volumes and elevated diesel costs.
Founder and CEO Patrick Dovigi said the company’s first-half performance demonstrated the resilience of its business model amid a mixed macroeconomic environment. “Our strong start to the year continued through the second quarter, yielding financial results ahead of expectations,” Dovigi said.
Second-quarter revenue increased 16.3% from the prior year, including 6.4% organic growth, Chief Financial Officer Luke Pelosi said. Organic growth accelerated by 180 basis points from the first quarter as pricing and fuel-related surcharge revenue more than offset volume and commodity-related pressures.
Pricing strength offsets volume pressure
GFL reported price growth of 6.1% in the quarter, exceeding its plan by 20 basis points. Pricing increased 6.2% in Canada and 6.1% in the U.S. Pelosi said the company now expects full-year pricing to finish above 6%, nearly 50 basis points ahead of its original forecast.
The company attributed the outperformance partly to the continued realization of previously identified pricing opportunities, including additional fuel surcharges. Management said it expects to continue pursuing pricing above cost inflation in order to maintain returns on invested capital.
Volume trends were better than anticipated in the quarter, though certain categories remained weak. Transfer-station and residential-collection volumes benefited from a recovery following winter weather disruptions in the first quarter and from extended producer responsibility, or EPR, activity. However, external construction and demolition and special-waste landfill tons declined 10% year over year.
Pelosi said the company expects those construction-related trends to persist for the remainder of the year, leading GFL to update its full-year volume outlook to a decline of about 50 basis points. Management said any recovery in construction and demolition activity would provide upside to its outlook.
Commodity pricing provided a modest offset. Market prices in the second quarter were about C$12 per ton higher than GFL had included in its quarterly forecast, Pelosi said. If current pricing levels persist, third-quarter commodity pricing would be approximately 20% above the prior year, he added.
Margins expand despite fuel headwinds
Adjusted EBITDA margin was 30.4% in the second quarter, including a 65-basis-point drag from acquisitions. The Canadian segment posted a 34% adjusted EBITDA margin, its highest level to date, according to Dovigi.
GFL said operating and selling, general and administrative cost intensity improved excluding the effect of elevated fuel prices. Cost of sales as a percentage of revenue declined 80 basis points excluding fuel effects, while SG&A cost intensity improved 50 basis points.
Diesel costs remained a significant headwind. GFL’s direct cost per unit of diesel increased nearly 60% year over year in the quarter, while third-party transportation providers’ fuel surcharges created a C$5 million headwind to its second-quarter guidance. Pelosi said the company’s surcharge revenue is now sufficient to offset higher ongoing fuel costs, but results remain affected by costs incurred during the initial surge in diesel prices before surcharge mechanisms caught up.
Excluding fuel, commodity and acquisition effects, GFL said underlying consolidated second-quarter margin increased 125 basis points from a year earlier. Management cited pricing, labor improvements, lower repair and maintenance cost intensity, route optimization, acquisition integration and other self-help initiatives.
Raised 2026 outlook and acquisition plans
GFL now forecasts for 2026:
- Revenue of C$7.52 billion;
- Adjusted EBITDA of C$2.29 billion;
- Adjusted free cash flow of C$900 million;
- Cash interest expense of C$445 million; and
- Net capital expenditures of C$850 million.
The company’s revised forecast calls for a 30.5% adjusted EBITDA margin, 10 basis points above its previous outlook. Pelosi said that, without elevated diesel prices, full-year margin would be above 31%, representing more than 100 basis points of expansion from the prior year despite acquisition and commodity headwinds.
GFL expects third-quarter revenue of approximately C$1.99 billion, adjusted EBITDA margin of 31.2% and adjusted free cash flow of about C$235 million.
The company closed seven acquisitions during the quarter, including Frontier Waste Solutions and six tuck-in deals. Dovigi said Frontier’s initial performance under GFL ownership had been “exceptionally” strong, with the company targeting a doubling of that Texas business over five years through organic and inorganic growth.
GFL continues to expect C$300 million to C$500 million of additional acquisition deployment before year-end. Its updated guidance does not include contributions from the pending acquisition of SECURE, which management expects to close around the beginning of the fourth quarter following a Competition Bureau review. Dovigi said SECURE could lift 2026 adjusted EBITDA growth above 20% if the transaction closes in the fourth quarter.
Board reviewing unsolicited take-private interest
During the question-and-answer session, Dovigi confirmed that GFL had received unsolicited potential take-private approaches. He said the board has formed a special committee and instructed management to explore potential alternatives.
Dovigi said he would roll all of his equity into any proposed transaction and emphasized that he is not seeking to exit the business. He said the company could remain public or potentially pursue a transaction, depending on what the special committee determines is in shareholders’ interests.
“Either path is a good path,” Dovigi said, adding that GFL would continue to operate normally and pursue the SECURE acquisition in parallel. He said the company does not plan to alter its ordinary-course strategy, including M&A activity, because of the review.
About GFL Environmental (NYSE:GFL)
GFL Environmental Inc is a leading North American provider of diversified environmental services, offering comprehensive solutions across solid waste management, liquid waste management, soil remediation and infrastructure services. The company's core business activities include residential, commercial and industrial waste collection, recycling, composting and landfill management. In addition to traditional waste services, GFL provides specialized liquid waste hauling, treatment and disposal services as well as environmental consulting to support industrial and municipal clients in meeting regulatory and sustainability goals.
Founded in 2007 by entrepreneur Patrick Dovigi, GFL Environmental has pursued an aggressive growth strategy driven by strategic acquisitions and organic expansion.
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