Tyler Brown — Associate VP, Raymond James
Hey, good afternoon, guys.
Jon Vander Ark — President and CEO, Republic Services
It's on. Hey.
Tyler Brown — Associate VP, Raymond James
Hey, Brian. I know there's a few moving pieces and I appreciate the EBITDA hold, but can you just kind of maybe parse out a little bit the $200 million or so reduction in the revenue guide, just how much of that was ES versus say commodities?
Brian DelGhiaccio — EVP and CFO, Republic Services
Yeah, Tyler, it's actually, I would say there's two primary components. One, we are reducing our volume expectation within the recycling and waste business. That is predominantly due to, again, we talked about weakness in construction related activity, but also the weakness in manufacturing end markets which impacts our recycling waste business. That's about $65 million or so of the $190 million reduction at the midpoint. The rest of it primarily being in environmental solutions. If you think about commodity sales, fuel recovery fees and RINs, the decrease we're seeing there is predominantly offset by incremental acquisitions that we completed in the second quarter.
Tyler Brown — Associate VP, Raymond James
Okay, okay, that's extremely helpful. Then just a little additional color maybe on why ES has been a little slow. I mean, I know that the industrial market's in a malaise. It sounds like you had some bigger project work roll off, but is that really the story or were there any share losses or just any additional color?
Brian DelGhiaccio — EVP and CFO, Republic Services
Yeah, I think the dominant is the macro. I mean, you think about manufacturing and this is where trade policy impacts, which is, you know, manufacturers are not making capital decisions. Right? Production is slowed. You can see that through PMI. Now somewhat optimistic here. We see a recovery of that, but that's what's impacted us to date and that we're forecasting, you know, being conservative for the rest of the year. Kind of more of the same on that front. Listen, we haven't always gotten it right. We've done a tremendous job of taking price and you've seen that. Some of that is shedding non-regrettable work. Some of that is we probably just priced ourselves out of a couple opportunities that we're now getting ourselves back into. A couple parts of the business when volume is slow. We've seen this in ES and we've seen this in national accounts. You see people getting trading off volume for price. Those are short term phenomenons, we think, on that front. When forced to choose, we're always.
Tyler Brown — Associate VP, Raymond James
Okay. And just real quickly, I know that US Ecology and the Ultra Vida business are maybe kinda hidden in that portfolio, but can you just remind us how big your E&P business is in the U.S.?
Brian DelGhiaccio — EVP and CFO, Republic Services
Yeah. So of the E&P, when you think about of total Environmental Solutions, it's representing, yeah, mid single digits of, you know, kind of our, you know, the total portfolio.
Tyler Brown — Associate VP, Raymond James
Okay. It's pretty small. Okay, that's what I was after. Okay, thank you.
Bryan Burgmeier — Analyst, Citi
Good afternoon. Thanks for taking my questions. You know, maybe just on the kind of estimated impact from labor disruption, are you able to share sort of what comprises the estimated impact that you forecasted? I mean, is it entirely lost volume or is there an element of, you know, assuming some higher wages or maybe you're paying an outside hauler? Is it possible to say, you know, maybe how much of that has already been experienced and how much is sort of going to be, you know, August, September, moving forward?
Jon Vander Ark — CEO, Republic Services
Yeah, it's primarily two things. The primary is the additional labor costs we have of moving our colleagues in to service our customers so that our customers aren't experiencing disruption and feel very good about where we're at with that today. The secondary cost is some credits we'll issue to customers in markets where they have had labor disruption. Again, most of the time we've had a very quick recovery. In places where it's been a little more protracted, we're going to take care of customers on that front.
Bryan Burgmeier — Analyst, Citi
Got it, got it. Maybe longer term, when these contracts are eventually renewed, presumably with some level of a wage increase. Can you maybe talk about how Republic has historically mitigated the impact from higher wages, what that could look like flowing through the P&L and maybe just what kind of levers are available to you? Thanks, I'll turn it over.
Jon Vander Ark — CEO, Republic Services
Yeah, look, we're very frontline focused. We want our people to make a very competitive wage in the markets they operate, whether they're represented by a union or not. We think about that all the time. It's critical for us to get that right. Too low, right, obviously we have high turnover and we can't service our customers. Too high isn't good either. It's not good for frontline people because we become less competitive in the market and we lose opportunities to serve customers and we shrink our workforce. You know, across our markets today we're very confident in terms of the wages that we put out and benefits for our colleagues. In many of these markets we're experiencing single-digit turnover. Right. This isn't, not, we don't have a wage or a benefit problem in these markets. We've got a labor disruption that we're working through and we're actively ready to negotiate and hope we get through it quickly. We're also prepared for any scenario.
Noah Kaye — Analyst, Oppenheimer
Hey, thanks for taking the questions. First one, just on the higher free cash flow outlook, maybe just for avoidance of doubt, is that all really from the bonus depreciation benefits, can you say how much those were and if there's any other moving pieces to take the free cash flow outlook higher?
Brian DelGhiaccio — EVP and CFO, Republic Services
Yeah, so no, it's two components. So the increase from bonus depreciation, about $80 million benefit, that's partially offset by an increase in the CapEx of $25 million. In part, we've got a relatively small impact from some potential tariffs, but also some opportunities that we took to buy out some leases and really leverage our favorable balance sheet there and just our lower cost of capital.
Noah Kaye — Analyst, Oppenheimer
Right. Which has some margin benefits over time. Which actually leads into my next question. I think to pick up on Tyler's point. The revenue outlook was helpful. The bridge to prior margins are going higher here, and I guess maybe the lower expected revenues in ES could be mixed positive. It just seems like there's kind of better underlying solid waste margin expansion here. Can you kind of help us do the similar bridge on the margin outlook versus what you had before?
Brian DelGhiaccio — EVP and CFO, Republic Services
Yeah. As we talked about, when you have the revenue and then you take a look at the flow through to EBITDA, there is some positive mix. While we're seeing a reduction in environmental solutions revenue, and I mentioned on the recycling waste side the reduction in expectations around construction activity, we did see the positive contribution from those landfill volumes. Right in both, you know, Los Angeles as well as in the Carolinas, that mix helps the overall margin just because those landfill volumes fall through at a relatively higher EBITDA margin than, let's say, the collection volumes or the ES volumes.
I would say it does point out the overall strength of the business. Right? You think about the demand environment outside of COVID, this has been the most challenging demand environment, now protracted for more than a decade, and softness in volume in a few spots. Overall, expanding margins in a very challenging environment, I think, speaks to the strength and the long-term nature of the business. When you start to see volumes come back and return, I think we're setting our sights on even higher targets.
Noah Kaye — Analyst, Oppenheimer
Very good. I'll turn it over.
Toni Michele Kaplan — Analyst, Morgan Stanley
Thank you. First, I wanted to ask on the C&D, volumes looked particularly good in the quarter and we saw some disparity between the big three on this particular line. I was wondering if you thought that this was a geographic thing or definitional or are you taking share in this particular part of the business? Just any color on strength versus the market would be great.
Brian DelGhiaccio — EVP and CFO, Republic Services
Yeah. Toni, I mentioned the hurricane volumes. They're coming through the C&D line item within our landfill book of business. That's what that entirely is. When you take a look at construction more broadly, where you see some of the temporary large container volumes, you can see those continue to run negative, which is impacting our large container volume. We would say more broadly, when you take a look at pure construction activity, that's still a negative demand environment. Those events almost always end up being connected to the landfill that's got the lowest cost logistics. Proximity matters the most in those cases.
Toni Kaplan — Analyst, Morgan Stanley
Great. I wanted to ask the labor disruption question in maybe a different way, I guess, how do you think that? First, it sounded like maybe you were alluding to. You see it as a specific regional issue in different areas. Do you think it impacts the cost in the industry in the future and price cost spread? Is it more of an industry thing or do you think that it's more contained and specific? Thanks.
Jon Vander Ark — President and CEO, Republic Services
Yeah, I think it's more contained and specific. We don't have a national contract. We have all local contracts and we're about a third unionized in our frontline workforce. Again, we feel very strong about the competitiveness of our cost position and the fitness of it, as I mentioned. Right. We don't want to get it too high because we're out of market and we lose work. We also don't want it to be too low because then we can't retain our very talented people and can't service our customers, which allows us to get that price increase. We feel very comfortable with the cost position today and moving forward.
Toni Kaplan — Analyst, Morgan Stanley
Thank you.
Sabahat Khan — Managing Director, RBC Capital Markets
Great, thanks very much. Maybe just on some of the commentary from earlier around tariffs. Other moving pieces in the macro, presumably there's some cost increase across the business, I guess with the macro where it is. How are your discussions on pricing for next year going? Not looking for guidance, but just the acceptance of price customers, understanding that there are tariffs and other moving features. Should we expect a similar type of trajectory going forward relative to what we've seen recently?
Jon Vander Ark — President and CEO, Republic Services
Yeah, we're seeing that tariff impact come through. Again, it's de minimis for us compared to most organizations. We're working on two fronts, obviously getting transparency with our suppliers, making them call out what is tariff related and then negotiating and pushing back on that. Not down to zero in every case, but pushing back to make sure that we're not just taking the headline number that they present to us. On the other side, some of that there will be cost increases and we'll do everything we can to pass that through through price next year. Again, thinking about a 30 to 50 basis point margin spread, you know, per year across the cycle, we still think we're capable of doing that in this environment.
Sabahat Khan — Managing Director, RBC Capital Markets
Okay, great. Understanding that some of the ES volumes could be affected by the macro like they might be this year, does that change the margin trajectory or the margin improvement journey you're on? Kind of second part, how far along are you on that journey? If you just think about since adding some of those platforms to your business, maybe how much more runway is there still on that front? Thanks.
Jon Vander Ark — CEO, Republic Services
Yeah, maybe I'll start with the end. Over time we think there's considerable run room. Just given the nature of the very technical waste streams we challenged, given the number of landfills and incinerators in the post collection environment, we think all that creates opportunity for margin expansion over time. I mentioned before, if you measure the progress here in any given quarter, you're going to be disappointed because this isn't going to be a straight line of progress. There's going to be ups and downs and it's a smaller business. You have comps and changes in demand. If you look across the years, I think we've demonstrated very consistent steady margin expansion. If you look forward, I think you're going to see the same trajectory over the next four to five years.
Sabahat Khan — Managing Director, RBC Capital Markets
Thanks very much.
Tami Zakaria — Analyst, JPMorgan
Hey, good afternoon. Thank you so much for taking my questions. My first question is actually if you could provide a little more color on the volume cadence for the remainder of the year, should we expect volumes to get sequentially better or pretty much rattable in 3Q, 4Q any color on volume?
Brian DelGhiaccio — EVP and CFO, Republic Services
Yeah, we would expect, you know, as we think about the second half of the year, if you just, you know, do the math based on what we're guiding to, to be, you know, flat to slightly negative in the second half of the year here. We do have some of the event-driven landfill volumes. We do have some contribution continuing into the third quarter. We expect that to be somewhat flattish on a year-over-year basis and then turn into negative by the time of the fourth quarter as those projects are completed.
Tami Zakaria — Analyst, JPMorgan
Got it, thank you, that's very helpful. And then similarly on pricing, any color on what to expect for 3Q versus 4Q?
Aaron Evans — VP of Investor Relations, Republic Services
Look, we've been just over 5% average yield on related revenue in the first half. We're maintaining our perspective of 5% for the full year. It modulates a little bit but you can think, you know, just under 5% in the second half of the year.
Tami Zakaria — Analyst, JPMorgan
Got it. Thank you so much.
Faiza Alwy — Analyst, Deutsche Bank
Yes, hi. Thank you. I wanted to ask about the lower revenues that you're citing on the core business. I think you said $65 million. I just want to put a final point on that because I don't think you had a lot of the event-based maybe impact that was in the guide. I would have thought that that would offset the incremental macro weakness. Just give us a bit more color on, like, is it more regional? Is there any specific exposure that you might have that's impacting the lower volume guide? I know you'd also talked about weather in the firs quarter, so maybe it's related to that.
Brian DelGhiaccio — EVP and CFO, Republic Services
If you think about when we entered the year, right, our guidance was predicated on an economy that was relatively flat. Again, we were seeing volume declines in the construction business throughout last year. We really expected that to anniversary and produce year over year results that were flat with the prior year. You can see we're still on the large container side, we're still producing kind of a mid single digit decline on a year over year basis. We're seeing further declines from a level of activity perspective than what we saw in the prior year that was not expected. Most of it is really that construction related activity. As I mentioned earlier, when you think about weak manufacturing end markets, that just does not impact our environmental solutions business. We have a $1.5 billion market vertical in recycling waste that's focused on manufacturing end markets. Jon just talked about the weakness that we're seeing there, some of the uncertainty that our customers are seeing and what that does to volume production, and it's certainly having an impact on our business.
Faiza Alwy — Analyst, Deutsche Bank
All right, understood. Then just on the environmental solutions business, could you give us a sense of like what your, you know, where we are from a volume and price perspective? I'm curious, I know we had, you know, last year you maybe talked about, you know, sort of pricing above, I guess, trend and I'm curious where we are at this point and I know you mentioned sort of some of the volume versus price dynamics. Curious if you can tell us what you saw, volume versus price in ES.
Brian DelGhiaccio — EVP and CFO, Republic Services
Sure, yeah. Price positive and volume negative, and obviously that speaks to, and that business has got some scale sensitivity to it given the post collection environment. To be able to have flat margins in that environment just speaks to, again, trading off price for volume in this case. Again, we have not always gotten it perfectly right, lost a little bit of share in that volume and team is working really hard in places where it's positive to go get those opportunities and feel optimistic about the growth outlook. Again, the next couple of quarters I think are going to be uncertain. If you think of the longer term view here over the next four to five years, I couldn't be more excited about manufacturing in the United States.
If you just think about the results that we've produced since we acquired US Ecology, for the vast majority of that timeframe we've been in a PMI environment that's sub 50. Right. Since the beginning of 2023 there have only been three months that have exceeded 50. Look at what we have done in a negative demand environment. It gives us a lot of confidence and really encourages us about what the future could bring when manufacturing activity actually resumes.
Faiza Alwy — Analyst, Deutsche Bank
Great, got it, thank you.
Trevor Romeo — Analyst, William Blair
Good afternoon. Thanks for taking the questions. First one I had was just on the M&A pipeline. It sounds like maybe you did a couple deals in Q2. You sounded pretty bullish, I think the past few quarters on the pipeline. Just any update there in terms of size, regions, any bias to one of the either recycling and waste or ES or just anything else on the pipeline would be really helpful.
Jon Vander Ark — President and CEO, Republic Services
Yeah, pipeline remains strong and robust, I'd say with the exception of don't see any transformational deals in the immediate term. It shouldn't be a surprise most of what we do here are some nice regional sized deals or small tuck ins on that front. Listen, there's a little lumpiness to this pipeline. The pipeline is strong, but the lumpiness to the activity of when deals close on that front and already off to a strong year and the forecast is strong for the rest of the year.
Trevor Romeo — Analyst, William Blair
Okay, that makes sense. Thanks, Jon. Just going back to margins, I guess as we look to model margins in the second half, anything specific you'd call out on kind of the quarterly cadence or seasonality just because you may have a few moving pieces? Just any thoughts on, I guess, Q3 versus Q4 and the consolidated margins would be great.
Jon Vander Ark — CEO, Republic Services
Yeah. The one thing I would point out, and this is more of a year over year type comparison, is that we called out in third quarter 2024, we called out about $20 million of out of period benefits which provided about 40 basis points of uplift to the margin in Q3 of 2024. We have to overcome that. Again, when you take a look at, call it relatively flat margin performance in the second half of this year compared to the prior year, probably a little bit negative in the third quarter because we have that 40 basis points we have to overcome and a little bit positive in the fourth quarter.
Trevor Romeo — Analyst, William Blair
Got it. Very helpful, thank you. Appreciate it.
Stephanie Moore — Analyst, Jefferies
Hi, good afternoon. Thank you. I wanted to touch a little bit about the maybe medium term margin opportunity or just investment opportunity that comes from leveraging your RISE platform. So, you know, now that this platform has, you know, successfully been rolled out across the network and your fleet, if you could talk a little bit about what's next in terms of how you can, you know, maybe harvest that data or the opportunity of having that rolled out that, you know, eventually we can see that, you know, can drive, you know, kind of longer term margin opportunity. Thank you.
Jon Vander Ark — CEO, Republic Services
Yeah, I think we have two components to it. One is it allows us to connect and communicate with the customer more proactively to understand, giving them more precise times on service pickups, service verification, all of those things. We're doing some of that already, but more proactive, you know, pushing and communicating. We know anytime we're more digitally connected with a customer that they are going to, you know, stay with us longer, which creates an opportunity for a very profitable customer to stay in the portfolio. On the efficiency side, we're starting to use AI to build routes. That's the next opportunity to harness all that data and think about how do we more efficiently build routes, and not doing that in a lights out fashion, but using our very talented logistics team AI together to figure out how do we get the same number of stops done in five less minutes, 10 less minutes, 20 less minutes a day. We have talked about a minute taken out of the system across the years being worth $4 million to $5 million for us. This is really a game of seconds and then minutes that can drive real cost efficiency into the business.
Stephanie Moore — Analyst, Jefferies
Got it. I just wanted to touch a little bit on the Polymer Centers. Maybe you could just give us a quick update in terms of how the centers that are open are performing in terms of efficiency rates compared to what you've been targeting. Pricing opportunity, any color there would be great. Thank you.
Jon Vander Ark — CEO, Republic Services
Yeah, I think Vegas we talked about a little slower out of the gates for some construction reasons on that and then certainly had some learning curve on that in terms of exactly the quality specs our customer wanted and getting that communication clear. I think Vegas is making great progress. You know, Indy is hitting its marks because we've taken all the learnings from Las Vegas and built those into Indianapolis and then we'll leverage all those learnings, of course, in Pennsylvania for a third center as well. I feel very excited that we're capturing the benefits of those learning. And listen, we have the supply. That's one of the reasons we did it. The demand for the product is through the roof, right? The world is short supply. The country's short supplied on recycled PET. So we feel very confident about the returns profile of this over time.
Tobey Sommer — Managing Director, Truist
Thanks. I wanted to ask a question about your, on the labor side, you've covered a bunch of the demand and top line stuff. Turnover and associated expenses of recruiting, safety, et cetera have gone down now successively for a number of consecutive years. Do you think there's room to go on this? Or if we see the labor market pick up and the economy pick up, might there be sort of a trade off between industrial volumes improving but the labor related expenses sort of creeping higher as well.
Jon Vander Ark — President and CEO, Republic Services
Yeah, we're certainly not immune to the macro. And so if, you know, economy takes off and we go back to a very, very tight employment market that's going to have, you know, some impact on either our growth and or to be able to supply workers and or wage rates.
Although again, I feel really good about our team and our talent of recruiting people. But also the culture we built, right? We focus intensely on employee engagement and being a place where the most talented people want to come to work. So how you treat them is a big part of that. The stability of the work is a big part of that. And then also compensation benefits. And we've talked a lot about this call about getting that right and being very competitive. And while we're not perfect every time, I think we've done a really good job of improving that successively every year and dynamic enough to adjust that based on the macro environment, so it doesn't cause me any concern in terms of a hotter economy causing a labor pitch for us.
Tobey Sommer — Managing Director, Truist
Okay. On the ES side you mentioned confronted with price versus volume, you're always going to choose price. Anything you're seeing out in the market with respect to competitors' behavior make you think that there's a greater or lesser chance of continuing to fuel the business with acquisitions? Just curious if any of those behaviors are interrelated and therefore could inform the M&A outlook?
Jon Vander Ark — President and CEO, Republic Services
No, I think the M&A outlook is strong. I think from a competitive conduct standpoint. Listen, when you're in a kind of a challenging demand environment for a period of years, you start to see some people can make different trade-offs on volume versus price. We're seeing that in part of the ES market and we're going to stay disciplined. I think the good news is that is marginal in the broader scheme of things. A really good story in terms of margin improvement in that part of the business over time and we don't see that trend stopping.
Rob Wertheimer — Director of Research, Melius Research
Thanks and good afternoon. I had a question on the second half incrementals which you guys covered pretty well. I was still left a little bit wondering if when you add back labor, is there any residual inefficiencies just from dealing with a situation that depressed margins slightly in 2H?
Brian DelGhiaccio — EVP and CFO, Republic Services
No. Again, I think if you. When we talked about the labor disruption, I mean again we're planning on backing those out of the adjusted results and again, those were those incremental costs that Jon walked through. When you talk about on the second half, it's not as much about what's happening in the current period. If you take a look at prior year, you can see when she ramp up that we saw first half into second half, we just get into tougher comps. We still expect to price ahead of cost inflation and we still expect to sit there and see the benefits of, you know, some of the, you know, labor productivity investments that we're making. It's just going to sit there. It's going to modulate and taper off as compared to what you saw as margin expansion in the first half of the year. That was fully anticipated when we provided guidance in the beginning of the year as well.
Rob Wertheimer — Director of Research, Melius Research
Gotcha. No, understood. And then just a second minor one. When you look at the big beautiful bill, does that change your appetite for CapEx? You have areas you can invest profitably. I'm just curious if you reevaluate plans given the bonus depreciation. Thank you.
Brian DelGhiaccio — EVP and CFO, Republic Services
Yeah. When you take a look and again there's a certain amount of replacement CapEx that you're going to do each and every year and we do that somewhat ratably. So just because you have a 100% bonus depreciation, that doesn't mean that you're going to sit there and take asset that you have that still has remaining life and retire it. Again, it actually on the margin, if you sit there and say, would you sit there and accelerate some things? I mean, perhaps on the margin, but for the most part we are steady, we are consistent, and we're ratably replacing the assets in the business year in and year out.
Rob Wertheimer — Director of Research, Melius Research
Thank you.
David Manthey — Analyst, Baird
Thank you. Good afternoon. I just wanted to be clear on the third quarter 2024 unusual benefit there. I recall there was a 50 basis point insurance recovery and then there was also a bad debt item. I was not clear on whether that was a positive or a negative. It sounds like you're saying that was a minus 10 leading to the net 40 basis points of favorability, is that correct?
Brian DelGhiaccio — EVP and CFO, Republic Services
No, actually there were $20 million worth of benefits in 3Q 2024. The insurance recovery was a positive $15 million and the bad debt recovery was a positive $5 million. That is what impacted 3Q 2024. Our commentary on the 50 basis points last year was in the prior year. Now you are back into 2023. We actually had some negatives. Now you are talking about the spread 2023 over 2024. What we are saying is when you compare 2025 over 2024, you are really just having to overcome that $20 million benefit that we saw in Q3 of 2024. Again, the insurance recovery, $15 million, bad debt positive recovery was $5 million.
David Manthey — Analyst, Baird
Perfect. All right, thank you. ECoL used to break out base versus event work. It sounds like you're saying that the base ES work is pretty lackluster given industrial production levels. Do you have any comments around environmental services event opportunities you're seeing in chemicals, metals manufacturing, refining, some of the key industries there?
Brian DelGhiaccio — EVP and CFO, Republic Services
Yeah, I'd say one thing and, you know, good news, bad news. There's been less emergency response work this year, so good, from a societal standpoint, we've had fewer emergencies to deal with. Challenging for the business, obviously, because those end up being very profitable opportunities for us to go. We know that across the cycle and there's going to be years that that spikes and years that that is a little lower on that front. It's been a slower first half of the year. We'll see what the second half looks like.
Any discretionary work on site cleanups or other things, this is where the macro, I think, is causing manufacturers to pause. I mean, people are focused on tariff policy, relocating, manufacturing, figuring out how to get, you know, warehouse goods, et cetera. Anything ancillary to their operation they've just put on pause. Our pipeline looks good, but events and those opportunities aren't moving at the pace that we would expect. It's the uncertainty that hurts people. As we get more certainty around trade policy, we're optimistic that that starts to move.
David Manthey — Analyst, Baird
Understood. Thank you.
Konark Gupta — Analyst, Scotiabank Capital
Thanks for taking the time. I understand you'll be adjusting out the labor impact from the adjusted results you will post, but just an update in terms of where the labor agreements are right now. My understanding is you had a few different regions of the country where you had these disruptions, but you have achieved maybe some agreements in some places. Can you update us where and what agreements are left right now? Thanks.
Jon Vander Ark — President and CEO, Republic Services
Sure. Yeah. What happened is a number of markets went out with contracts that were expired and chose to strike. A few other contracts in different parts of the country have sympathy strike language where if people show up to picket, the workers do not cross those lines. We have kind of recovered on all of those sympathy strikes. Our colleagues are back to work. We typically see this ends up being a day or sometimes a week activity. Right? Now we are down to just a few markets where we are negotiating to get agreements on that front. Again, we are going to negotiate in good faith. We want a deal that is, you know, very fair and competitive for frontline people. We are not going to do any deal that impairs the longer term health of the business or hurts our colleagues longer term.
Konark Gupta — Analyst, Scotiabank Capital
Okay, that is great, thanks. Just on the M&A, I think you provided some good color in terms of what the pipeline looks like. How much contribution in terms of revenue have you embedded in the guidance portfolio?
Brian DelGhiaccio — EVP and CFO, Republic Services
Yeah, so again, if you take a look at what we're expecting, there's 120 basis points of contribution to 2025 growth, 100 of which was included in the guide. Because again we had known about that. That was the Shamrock deal. That was already known at the time when we provided the guidance. 20 is incremental.
Konark Gupta — Analyst, Scotiabank Capital
I'm sorry, what was that last part?
Brian DelGhiaccio — EVP and CFO, Republic Services
Sorry, 20 is incremental. Right? You had 100...
Konark Gupta — Analyst, Scotiabank Capital
$20 is incremental, correct? Yeah, that's about $35 million of annual rep. Correct. Thank you so much. Thanks.
James Schumm — Analyst, TD Cowen
Hey, thanks. Just also on the M&A, but with respect to environmental services, there's been some, you know, some high multiples paid for some of these targets 14, 15, 16 times EBITDA multiples have been paid. Are you seeing as you look at takeover targets that a lot of these sellers are trying to really up their asking price? Are you seeing a widening of the bid ask spread in the ES market with respect to M&A?
Jon Vander Ark — President and CEO, Republic Services
I do not think we're seeing a widening of the spread. I do think that if you look across the last five years, multiples have absolutely gone up. They've gone up in recycling and waste too, but they've gone up faster in ES in large part because there's been so much value that's been driven in that part of the business. The businesses are becoming more valuable on a forward looking basis.The multiple is totally dependent on what you're buying. If you're buying something with limited infrastructure, more field services based, that multiple is going to be a fraction of what you mentioned. If you're buying something with great permitting, great infrastructure, that could be a very value creating deal in that. Again, we're going to look at unlevered cash on cash returns. The multiple ends up becoming an output.
James Schumm — Analyst, TD Cowen
Great. Okay. Thanks a lot. That's all I had.
Jon Vander Ark — President and CEO, Republic Services
Thank you, Chuck. As we close out today's call, I want to thank the entire Republic Services team for their unwavering focus on safety, sustainability and customer service. Their commitment, energy and ingenuity are solving today's challenges and positioning us for continued success. Have a good evening and be safe.