# Waste Management, Inc. (WM): Narrative, Q3 2026

Quarter ended September 30, 2026. The Business, Risk factors and fiscal 2025 MD&A sections come from the FY2025 Form 10-K (accession 0001104659-26-012049). The current-quarter and subsequent-events sections come from the Q3 2026 Form 10-Q (accession 0001628280-26-067830) and the Q3 2026 earnings release furnished as Exhibit 99.1 to the Form 8-K of October 27, 2026 (accession 0001104659-26-119188). Earlier 2026 outlook figures come from the earnings releases of January 28, 2026 (accession 0001104659-26-007476) and July 28, 2026 (accession 0001104659-26-087575). All amounts are in US dollars.

## Business

*Source: FY2025 Form 10-K, accession 0001104659-26-012049.*

WM calls itself North America's leading provider of comprehensive environmental solutions. It collects, transfers, disposes of and recycles solid waste for residential, commercial, industrial and municipal customers across the U.S. and Canada, and most of its revenue comes from collection fees and from tipping fees at its landfills and transfer stations. Three newer businesses sit around that core. It turns landfill gas into renewable natural gas (RNG) and electricity. It processes and sells recyclables. Since buying Stericycle in November 2024, it also collects and treats regulated medical waste and shreds confidential documents in the U.S., Canada and Western Europe. No customer accounted for as much as 5% of 2025 revenue.

Management runs the company through five reportable segments. Two geographic Collection and Disposal tiers, plus ancillary services, form the "Collection and Disposal" business. The East Tier covers the Eastern U.S., the Great Lakes region and substantially all of Canada; the West Tier covers the Western, Southern and Central U.S., including the upper Midwest, and British Columbia. Of 2025 net operating revenue of $25,204 million:

- **Collection and Disposal ($20,704 million).** Collection brought in $15,421 million: commercial $5,630 million, industrial $3,106 million, residential $3,510 million and other collection $3,175 million. Landfill brought in $3,781 million and transfer $1,502 million. Prices are set locally and depend on volume, weight, waste type, collection frequency, distance to disposal and local airspace.
- **Recycling Processing and Sales ($1,492 million).** Tipping fees at WM's recycling facilities plus the sale of recovered paper, cardboard, glass, plastic and metal, including a brokerage business that markets commodities processed by third parties.
- **Renewable Energy ($478 million).** Sales of RNG, electricity and capacity, plus the environmental credits that come with them: RINs under the federal Renewable Fuel Standard (RFS), state low-carbon fuel credits and renewable energy credits. The segment pays a 15% royalty to the landfill-owning businesses, which is eliminated in consolidation.
- **Healthcare Solutions ($2,508 million).** The former Stericycle business, which provides regulated waste and compliance services (medical, pharmaceutical and hazardous waste) and secure information destruction. Customers usually sign scheduled-service contracts, and the volume per site is small.
- **Corporate and Other ($22 million).** Mostly costs: the corporate office, closed sites and minority investments in ancillary technologies.

The network is the competitive moat. At December 31, 2025 WM owned or operated 253 solid waste landfills and four hazardous waste landfills, the largest landfill network in the U.S. and Canada. It also ran 342 transfer stations, not counting those that came with Stericycle. Weighted-average remaining landfill life is about 38 years on permitted airspace, or about 39 years including expansion airspace; WM is seeking expansion permits at 15 landfills. Building and permitting a landfill takes a lot of capital, so third-party haulers often have to tip at WM sites. Sending its own collected waste to its own sites ("internalization") lets WM keep disposal fees it would otherwise pay out, and gives it higher margins. WM says its landfills earn its highest income-from-operations margins. WM had 103 landfill gas beneficial-use projects: 62 generating electricity, 24 supplying gas directly to industrial users and 17 producing pipeline-quality RNG. Healthcare Solutions operated about 307 facilities, including 51 autoclave or alternative-treatment sites, 17 medical waste incinerators, 99 secure-destruction plants and 140 transfer stations.

The strategy is "focused differentiation and continuous improvement". In practice that means pricing discipline backed by the asset network, automation to cut the cost to serve and reduce reliance on high-turnover jobs, and investment in recycling automation and RNG plants. WM had about 60,500 full-time employees: 53,600 in the U.S. and 6,900 outside it, with about 9,200 covered by collective bargaining agreements. Revenue and volumes rise seasonally in the summer, which shows up in second- and third-quarter results. Wildfire and hurricane cleanup can add revenue, usually at lower margins.

On capital returns: in December 2025 the Board said it expected to raise the quarterly dividend from $0.825 to $0.945 per share for 2026, a 14.5% increase and the 23rd straight annual increase. It also approved a new authorization of up to $3.0 billion in share repurchases. WM resumed buybacks in February 2026 and expected to repurchase about $2.0 billion of stock during 2026, while returning leverage to its target.

## Risk factors

*Source: FY2025 Form 10-K, accession 0001104659-26-012049. The Q3 2026 Form 10-Q (accession 0001628280-26-067830) reports no material changes to these risk factors.*

- **Strategy execution and price leadership.** WM's strategy relies on yield management. Refusing lower-margin volume can cost business; the company names its intentional exit from residential contracts as one example. Its automation and optimization programs may not deliver the savings intended.
- **Stericycle integration.** The acquired business carries risks of falling medical-waste and document volumes, disruption from ERP and billing systems, and customers lost over billing or service problems. Planned price increases may also arrive late. WM may not achieve the synergies it expects, or may not achieve them on schedule. At the acquisition, Stericycle was already involved in government investigations and lawsuits, including alleged noncompliance with the Controlled Substances Act in its now-divested Domestic Environmental Solutions business. These matters could still lead to penalties or permit actions.
- **Regulation, closure obligations and emerging contaminants.** WM has large accrued obligations for final capping, closure, post-closure and remediation. These could come due sooner, or cost more, if landfills close early or new contaminants are found. PFAS has already raised landfill operating costs. The EPA designated PFOA and PFOS as CERCLA hazardous substances in April 2024, which exposes landfills to remediation and litigation costs unless Congress grants relief. Extended producer responsibility laws could change recycling contract terms, pricing and volumes, and some of these laws are being scaled back or challenged in court.
- **Commodity and renewable-fuel prices.** Lower recycled-commodity prices cut 2025 revenue by $166 million, after higher prices added $245 million in 2024. RIN values depend on EPA rules. The current administration has retroactively lowered 2024 RFS blending volumes, proposed cuts for 2025, proposed low volumes for 2026 and 2027, and granted small-refinery exemptions. Any of these moves can reduce the returns on WM's RNG investments.
- **Diversion away from landfills.** Recycling and composting mandates, bans on landfilling certain materials and corporate zero-waste goals all reduce landfill volumes, and landfills are WM's highest-margin assets. Less organic waste in landfills also means less landfill gas for the Renewable Energy segment.
- **Permitting and land scarcity.** Permits to build or expand landfills and transfer stations are taking longer and costing more, and they face community opposition and environmental-justice reviews. When capacity runs short near big cities, WM may have to haul waste by rail or use alternatives at higher cost.
- **Labor.** WM competes hard for commercial drivers and technicians. Union organizing, withdrawal from multiemployer pension plans and higher minimum wages, particularly in recycling, could all raise costs.
- **Inflation, tariffs and the economy.** Much of WM's revenue is tied to price indexes with a lookback, so in fast inflation price recovery lags costs. Multi-year contracts can also limit price increases. Tariffs hurt the recycling export business and cross-border trade with Canada, weaken paper mills' demand for recycled cardboard, and raise the cost of imported trucks and equipment. A weaker economy reduces waste volumes and adds pressure on pricing.
- **Fuel and fleet transition.** Diesel prices and supply directly affect operating costs. WM has invested heavily in natural gas trucks and fueling stations, and rules mandating a faster move to electric heavy-duty vehicles could impair those investments and require large new capital spending.
- **Healthcare market dynamics.** Remote work and digital record-keeping could reduce demand for document destruction, and consolidation among healthcare providers puts downward pressure on medical-waste pricing.
- **Technology, cybersecurity and privacy.** WM has experienced cyber intrusions and is a frequent target. Healthcare Solutions' Western European operations face short breach-notification deadlines, and regulators in the U.K. and Europe have imposed significant fines.
- **Climate and emissions.** Severe weather, flooding and wildfire can damage landfill infrastructure and increase leachate. Future rules on measuring landfill methane could raise compliance costs.
- **Leverage, interest rates and liquidity.** WM's credit ratings depend on cutting leverage after the Stericycle acquisition. At year-end 2025, $2.9 billion of debt was exposed to market rates within 12 months. That included $1.8 billion of tax-exempt bonds whose term interest-rate periods expire before scheduled maturity. The $3.5 billion revolving credit facility, which matures in May 2029, backs the commercial paper program, and a default under it could trigger cross-defaults.
- **Financial assurance and impairments.** Higher costs or reduced availability of surety bonds, letters of credit or captive insurance could force WM to post cash collateral. WM carries large goodwill balances. The Healthcare Solutions reporting units are the most sensitive to impairment because the business was acquired recently.
- **Litigation.** WM faces purported class actions over alleged environmental contamination and odors, sales practices and fees, and wage-and-hour claims, any of which could require substantial payments.

## Management's discussion: fiscal 2025

*Source: FY2025 Form 10-K, accession 0001104659-26-012049; adjusted measures and commodity prices from the Q4 2025 earnings release, accession 0001104659-26-007476.*

2025 was Stericycle's first full year in WM's results. That gave a large lift to reported revenue but held back GAAP earnings through integration costs, amortization and interest on the acquisition debt.

**Revenue** rose $3,141 million, or 14.2%, to $25,204 million. Acquisitions added $2,365 million (10.7%), mostly Stericycle. Internal revenue growth was $820 million (3.7%), made up of:

- **Collection and Disposal yield: +$719 million (3.8%).** Commercial yield was 5.1%, residential 5.4%, industrial 2.8%, transfer 4.9% and landfill 2.6%. Municipal solid waste yield at landfills was 6.5%.
- **Recycling and Renewable Energy yield: -$155 million.** Recycling yield fell $166 million as average single-stream recycled-commodity prices dropped about 20%; WM blames domestic paper-mill closures, weaker demand for recycled content and less cardboard packaging. Renewable Energy yield rose $11 million on higher natural gas and electricity prices, partly offset by lower RIN prices.
- **Energy surcharge and mandated fees: +$44 million.**
- **Volume: +$206 million (0.9%).** Growth was led by landfill special waste and municipal solid waste in the West Tier, much of it from wildfire cleanup, and by recycling and RNG growth projects. Residential volume fell as WM deliberately exited lower-margin contracts.

**Costs and margins.** Operating expenses were $15,012 million, or 59.6% of revenue, down from 60.7%. WM credits efficiency gains, lower employee turnover, newer trucks, price increases and higher-margin special waste. Selling, general and administrative expenses rose to $2,722 million (10.8% of revenue, from 10.3%) because of Stericycle, including integration consulting and technology spending. Acquisition and integration costs were $120 million: $89 million in SG&A and $31 million in restructuring.

**Income from operations** was $4,308 million, or 17.1% of revenue, compared with $4,063 million (18.4%). By segment:

- **Collection and Disposal:** $5,777 million, up 6.1%. The East Tier earned $2,904 million and the West Tier $2,889 million.
- **Recycling Processing and Sales:** a loss of $80 million, after income of $86 million.
- **Renewable Energy:** $135 million, up from $99 million.
- **Healthcare Solutions:** a loss of $88 million. Its operating earnings were more than offset by depreciation, amortization and integration costs.
- **Corporate and Other:** a loss of $1,436 million.

Net charges for divestitures, impairments and unusual items totaled $248 million:

- $160 million to impair a plastic film and wrap recycling business whose operations were temporarily suspended after the market for post-consumer plastics deteriorated
- $45 million for the accelerated closure of an East Tier landfill
- a $16 million goodwill impairment on an oil-recovery and sludge-processing business
- an $11 million payment to terminate a Renewable Energy contract early

**Below the operating line**, net interest expense rose to $912 million from $598 million on the debt raised for Stericycle. The effective tax rate was 20.9%. Section 48 investment tax credits for the seven RNG facilities completed in 2025 cut income tax expense by $184 million, and WM expects the cumulative benefit of these credits to reach $400 million to $425 million through 2027. Net income attributable to WM was $2,708 million, or $6.70 per diluted share, compared with $2,746 million, or $6.81. On WM's adjusted (non-GAAP) basis, EPS was $7.50 compared with $7.23. Adjusted operating EBITDA was $7,582 million, a 30.1% margin and the first full year above 30%.

**Cash flow.** Operating cash flow rose $653 million to $6,043 million, helped by higher Collection and Disposal earnings, acquisitions and lower cash taxes, and held back by higher interest payments. Capital spending was $3,227 million: $2,594 million to support the business and $633 million of sustainability growth investment, down from $950 million as the RNG and recycling build-out passed its peak. Free cash flow (non-GAAP) was $2,937 million, compared with $2,317 million. At year-end WM had about $3.7 billion of debt maturing within 12 months, and it expected to spend about $874 million in 2026 on landfill construction and development.

## Current quarter: Q3 2026

*Source: Q3 2026 Form 10-Q, accession 0001628280-26-067830; adjusted measures, core price, commodity prices and guidance from the Q3 2026 earnings release (Form 8-K, accession 0001104659-26-119188), with earlier outlook figures from accessions 0001104659-26-007476 and 0001104659-26-087575.*

In Q3, pricing and higher fuel surcharges drove revenue growth, the recycling and healthcare businesses swung to operating profit, and buybacks continued. Core Collection and Disposal volume was still soft, and higher fuel and risk-management costs held back margins.

**Revenue** rose $403 million, or 6.3%, to $6,846 million. The sources were:

- **Total average yield: +$326 million (5.1%).** It had three parts:
  - **Collection and Disposal yield:** +$171 million (3.4%). Residential yield was 5.4%, commercial 4.2%, industrial 3.1%, transfer 2.7% and landfill 2.2%, with municipal solid waste landfill yield at 4.2%. The release puts core price at 5.8%.
  - **Recycling and Renewable Energy yield:** +$43 million. Recycling yield rose $51 million as average single-stream commodity prices climbed about 20%; the release cites about $82 per ton, up from about $68. Renewable Energy yield fell $8 million on lower RNG prices.
  - **Energy surcharges and mandated fees:** +$112 million, as diesel prices rose about 50% from a year earlier.
- **Volume: +$53 million (0.8%).** New recycling automation projects and RNG plants added volume, but collection fell. WM is shedding lower-margin residential work and commercial volume is lower; the release ties the commercial decline mostly to national-account broker losses from earlier periods. Collection and Disposal volume declined 0.4%.
- **Healthcare Solutions: about flat.** In the 10-Q's revenue bridge, which counts yield and volume and leaves out energy surcharges, pricing gains were offset by lower volumes. The release, measuring total segment revenue, reports 3.7% growth.
- **Acquisitions, divestitures and currency.** Acquisitions added $33 million, divestitures removed $5 million and currency translation took off $5 million.

**Costs.** Operating expenses were $4,093 million, or 59.8% of revenue, compared with 58.9% a year earlier.

- **Fuel** rose to $173 million from $132 million.
- **Risk management** rose to $135 million from $72 million. Claims costs were higher, and the year-ago quarter had benefited from an insurance recovery on a 2022 transfer station fire.
- **Labor and related benefits** were $1,173 million. Wage increases and higher medical costs were partly offset by lower incentive pay and better residential collection efficiency.

The release says Collection and Disposal efficiency improved the operating-expense ratio by 40 basis points, but fuel and risk management worsened it by 130 basis points. SG&A fell to $655 million (9.6% of revenue, from 10.3%) as Stericycle synergies cut labor costs, partly offset by higher bad-debt expense. Starting in 2026, WM reports landfill accretion in depreciation, depletion, amortization and accretion rather than in operating expenses, and prior periods have been reclassified to match.

**Income from operations** rose 29.3% to $1,279 million, or 18.7% of revenue, from $989 million (15.3%). The year-ago quarter carried $197 million of impairments. By segment:

- **Collection and Disposal:** $1,542 million, up 5.0%. The East Tier earned $771 million and the West Tier $766 million. Pricing and efficiency drove the gain, partly offset by risk-management costs. This quarter carried an $18 million impairment for the accelerated closure of an East Tier landfill, compared with $45 million a year ago.
- **Recycling Processing and Sales:** income of $36 million, compared with a $137 million loss. The year-ago quarter included the $152 million plastic film impairment, and this year brought automation savings, new facilities and better commodity prices.
- **Renewable Energy:** $37 million, up from $21 million on higher volumes from completed projects, partly offset by lower RIN prices. The release puts the average RIN price at $2.32, down from $2.56.
- **Healthcare Solutions:** income of $20 million, compared with a $21 million loss. The 10-Q attributes the improvement primarily to integration costs incurred in the prior-year period, along with lower current-year costs from synergies and contributions from energy surcharges, partly offset by lower volumes. The release reports segment operating EBITDA up more than 30%.
- **Corporate and Other:** a loss of $356 million, compared with $342 million, mainly on higher risk-management expense.

**Below the operating line**, net interest expense was $237 million, compared with $225 million. It rose because less interest is being capitalized now that most sustainability projects are finished. The effective tax rate was 21.5%. RNG investment tax credits cut tax expense by $31 million, compared with $49 million a year earlier, and clean fuel production tax credits (Section 45Z) cut it by $16 million. Proposed Treasury regulations issued in the first quarter of 2026 clarified that WM's RNG sales qualify for the 45Z credit; of the $60 million of 45Z benefit recognized in the nine months, $27 million related to 2025 operations. WM now expects up to $225 million of cumulative 45Z benefit through 2029, plus the remaining Section 48 investment credits: $309 million of the expected $400 million to $425 million was recognized in 2023–2025, and the rest is expected in 2026–2027. Net income attributable to WM was $820 million, or $2.05 per diluted share, compared with $603 million, or $1.49. On the release's adjusted basis, operating EBITDA grew 5.8%. Collection and Disposal price-to-cost spread added 40 basis points to the adjusted margin and Healthcare Solutions another 30 basis points, but higher fuel costs and higher risk-management costs each took away 40 basis points, so the margin ended 10 basis points lower.

**Nine-month view.** Revenue was $19,757 million, up 4.6%, and income from operations was $3,645 million, compared with $3,153 million. Nine-month volume growth was only 0.2%. Harsh winter weather hurt volumes in the first quarter, and West Tier special waste fell against a prior year boosted by wildfire cleanup. The nine months also include a $34 million gain on the sale of a West Tier business. WM completed solid waste acquisitions for total consideration of $239 million, including $144 million paid in treasury shares and $89 million in net cash.

**Cash flow and capital returns.** In the quarter:

- Operating cash flow was $1,640 million, compared with $1,592 million.
- Capital spending fell to $657 million from $776 million. Sustainability growth spending was $55 million, compared with $141 million.
- Free cash flow was $985 million, compared with $821 million.

For the nine months, operating cash flow rose 12.0% to $4,867 million, and free cash flow was $3,009 million, compared with $2,114 million.

Buybacks in the quarter included a $350 million accelerated share repurchase that started in July and settled in September at a final average price of $217.10. Nine-month spending was $1,583 million on buybacks and $1,141 million on dividends, up from $1,001 million as the quarterly dividend rose to $0.945. At September 30, $1.4 billion of repurchase authorization remained. Shares outstanding fell to 397.7 million from 402.9 million a year earlier.

**Balance sheet and financing.** Debt stood at $23,370 million at September 30, compared with $22,907 million at year-end.

- In June 2026 Waste Management of Canada Corporation issued C$700 million of 3.944% notes due July 15, 2033, and in July 2026 it redeemed its C$500 million of 2.60% notes due September 2026.
- In August, WM repaid $223 million of 7.10% senior notes at maturity.
- It issued $100 million of tax-exempt bonds in the quarter.
- During the nine months it entered into $750 million notional of receive-fixed interest rate swaps, designated as fair value hedges of fixed-rate senior notes.

About $4.4 billion of debt matures within 12 months, and $2.9 billion of it is classified as long-term because WM intends to refinance it. The total includes $2.2 billion of tax-exempt bonds whose rate periods reset, $1.2 billion of commercial paper and $750 million of 4.95% notes due July 2027. WM had $2.0 billion of unused capacity under its $3.5 billion revolving credit facility.

**Sustainability projects.** In the quarter WM opened a new RNG facility in New York, its eighteenth new facility completed since 2022. In the second quarter it had completed three RNG plants in South Carolina and Florida, with about 3.5 million MMBtu of expected annual run-rate production, and a Denver recycling facility with about 60,000 tons of annual capacity.

**Legal and environmental matters.**

- **San Jacinto River Waste Pits Superfund site, Texas.** In April 2026 the EPA issued a Unilateral Administrative Order for the cleanup. WM's subsidiary MIMC and International Paper have said they will comply and have hired a remedial contractor. MIMC's recorded liability is about $100 million, but its final liability could be materially different.
- **Delaware.** On April 26, 2026, Delaware environmental regulators issued an order against a WM subsidiary covering landfill cover, stormwater, prohibited-waste and permitting matters. WM's appeal is pending.
- **IRS deposit.** WM received a partial refund of about $14 million on its 2017 tax-year deposit with the IRS, leaving $89 million on deposit. It expects to litigate if the rest of its refund claim is denied.

**2026 guidance.** WM's January outlook set these targets for 2026:

- revenue of $26,425 million to $26,625 million
- adjusted operating EBITDA of $8,150 million to $8,250 million
- free cash flow of $3,750 million to $3,850 million, up 29.4% at the midpoint
- capital to support the business of $2,450 million to $2,550 million
- about $200 million of sustainability growth capital

The outlook assumed:

- core price of 5.4% to 5.8%
- Collection and Disposal yield of 3.2% to 3.6%
- Collection and Disposal volume growth of 0.2% to 0.6%
- about 3% revenue growth in Healthcare Solutions
- a blended single-stream commodity price of about $70 per ton

Pricing is on plan: core price was 5.7% in Q2 and 5.8% in Q3. Volume is not. Collection and Disposal volume fell 1.8% in Q2, against a year-ago quarter boosted by wildfire cleanup, and 0.4% in Q3. In July WM cut the revenue range by about 0.6%, to $26,275 million to $26,475 million, for lower volumes but kept its profit and cash targets. On October 27 it affirmed the revised ranges, saying it expects revenue and free cash flow at the high end of their ranges and adjusted operating EBITDA within $8,150 million to $8,250 million.

## Subsequent events

*Source: Q3 2026 Form 10-Q, accession 0001628280-26-067830, and the Q3 2026 earnings release, accession 0001104659-26-119188.*

The Q3 2026 Form 10-Q, filed October 28, 2026, has no subsequent-events note. Neither it nor the October 27, 2026 earnings release reports any acquisition, divestiture, borrowing, debt issuance or litigation outcome after September 30, 2026. The post-quarter developments these filings do disclose are:

- **Guidance affirmed.** The October 27 release affirmed the revised full-year 2026 ranges described above.
- **Share count.** 397,634,916 shares were outstanding on October 23, 2026, compared with 397.7 million at September 30.