What GFL Environmental (GFL) Said on Its Q3 Earnings Call

Key Points

• GFL raised its 2026 outlook for the third time, now targeting C$8.055–C$8.075 billion in revenue, C$2.49–C$2.495 billion in adjusted EBITDA and C$1.02 billion in adjusted free cash flow.
• Third-quarter performance exceeded expectations, with revenue up 27% year over year and an adjusted EBITDA margin of 31.5%. Pricing, improving landfill volumes, acquisitions and cost controls offset significant diesel and landfill operating-cost pressures.
• The SECURE acquisition contributed strongly in its first month, while GFL began integration and identified additional synergy opportunities. Separately, the company’s strategic review has set a Nov. 9 deadline for updated bids, with a decision expected soon.

GFL Environmental NYSE: GFL raised its full-year 2026 outlook for the third time this year after reporting third-quarter results that management said exceeded expectations, supported by pricing, improving landfill volumes, cost controls and contributions from acquisitions.

Founder and CEO Patrick Dovigi said organic revenue growth accelerated by 100 basis points from the second quarter as core pricing outperformed expectations and volume and commodity pricing each improved by 50 basis points. Landfill volumes turned positive, including construction-and-demolition and special-waste streams, though management said construction activity, development and expansionary manufacturing investment remained muted.

Third-quarter revenue increased 27% from a year earlier, CFO Luke Pelosi said. The growth included 5.7% pricing and nearly 19% from mergers and acquisitions, primarily the Frontier and SECURE acquisitions. GFL closed its acquisition of SECURE during the quarter, contributing one month of results.

Margins pressured by fuel, supported by cost discipline

GFL reported a third-quarter adjusted EBITDA margin of 31.5%, 30 basis points above its expectations and nearly flat with the prior-year period, which management said marked the company’s highest historical margin. Pelosi said the result reflected significant fuel-related and acquisition-related headwinds.

Average diesel costs rose more than 60% year over year and increased another 10% from the second quarter, according to Dovigi. The September spike in diesel prices created a $5 million headwind relative to GFL’s original third-quarter outlook. The company now expects elevated diesel prices to add roughly $125 million of costs for the full year compared with its original guidance.

Management said its fuel surcharge programs have recovered most direct fuel-cost inflation, though indirect effects have also emerged in transportation, spare parts and other categories. Pelosi said GFL expects to recover roughly $105 million to $110 million of the estimated $125 million in annual fuel-related costs during 2026, with the remaining exposure primarily reflecting timing effects from rapid price movements.

Cost controls partly offset those pressures. Third-quarter cost of sales, excluding depreciation, amortization and integration costs, improved 70 basis points as a percentage of revenue excluding direct fuel costs. SG&A cost intensity also improved 70 basis points when excluding depreciation, amortization and transaction costs. Management cited lower labor and repair-and-maintenance cost intensity, improved labor retention, process optimization and corporate operating leverage.

Excluding fuel-related pressures and elevated landfill operating expenses, underlying adjusted EBITDA margin expanded 125 basis points year over year, according to the company. GFL said higher leachate transportation and disposal costs also weighed on margins, although Pelosi described much of the quarterly impact as timing-related rather than structural.

SECURE integration underway

GFL said the SECURE acquisition added approximately C$150 million in revenue, more than C$50 million in adjusted EBITDA and about C$25 million to C$30 million in adjusted free cash flow during its first month in the company’s results. Pelosi said SECURE is expected to generate about C$1.5 billion in annual revenue and C$550 million in EBITDA.

Dovigi said integration is underway and GFL remains confident it can achieve C$25 million in underwritten cost synergies in the near term. The company also sees a potential additional C$25 million to C$50 million in synergies from disposal and cross-selling opportunities.

Management said the outlook for SECURE’s western Canadian markets has improved since the transaction was announced. Dovigi said the company expects increased energy and infrastructure activity to create additional volume and organic investment opportunities, although he did not quantify the potential upside. GFL plans to evaluate high-return growth capital projects at SECURE alongside traditional acquisition opportunities.

Guidance raised again

Assuming current foreign-exchange, commodity and diesel prices, GFL increased its 2026 outlook to:

• Revenue of C$8.055 billion to C$8.075 billion;
• Adjusted EBITDA of C$2.49 billion to C$2.495 billion;
• Adjusted free cash flow of C$1.02 billion, including C$455 million of cash interest and C$910 million of net capital expenditures.

The company’s updated adjusted EBITDA margin outlook is 30.9%, up 40 basis points from prior guidance. Pelosi said full-year margin would have exceeded 31.5% without the rise in diesel prices. The guidance does not include contributions from additional acquisitions completed during the year.

Management said the updated outlook implies annual growth of more than 20% in revenue, 25% in EBITDA and 35% in adjusted free cash flow. Looking to 2027, Pelosi said GFL sees a path to more than 20% revenue growth, adjusted EBITDA margin near 32%, EBITDA of roughly C$3.12 billion and adjusted free cash flow above C$1.3 billion, though formal 2027 guidance will be issued with fourth-quarter results.

Strategic review deadline set for Nov. 9

Dovigi said GFL’s special committee has set a Nov. 9 deadline for bidders to submit updated proposals as part of its ongoing strategic review. He said the committee and its advisers are evaluating the best path forward and expects a decision “very soon.”

The CEO said management believes the company can continue creating value either as a public or private company. He added that feedback from potential investors and advisers during the process identified further opportunities in pricing, contract management and technology tools.

“Whether that’s publicly or privately,” Dovigi said, “we want to keep winning and having fun.”

About GFL Environmental (NYSE:GFL)

GFL Environmental Inc is a Canadian environmental services company that provides waste management and related infrastructure services to municipal, residential, commercial, industrial and institutional customers. The company's operations include the collection, transfer, processing, recycling and disposal of non-hazardous solid waste, as well as organics and other resource-recovery services.

GFL also provides infrastructure and soil remediation services, including the management of contaminated materials and related environmental projects.

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