Executive Summary

Q2 delivered clean beats with revenue $6.43B, adjusted EBITDA $1.923B, and adjusted EPS $1.92, all above consensus; GAAP EPS was $1.80 (beats driven by landfill volumes, collection & disposal (C&D) margin expansion, and sustainability project ramp) . EPS $1.92 vs $1.89*; revenue $6.43B vs $6.35B*; EBITDA $1.923B vs $1.873B* (beats) (Values retrieved from S&P Global).
Guidance pivot: WM affirmed the 2025 adj. EBITDA midpoint ($7.55B) and narrowed the range, raised FCF to $2.8–$2.9B, lifted adj. EBITDA margin to 29.6–29.9% (from 29.2–29.7%), and trimmed revenue to $25.275–$25.475B (commodity-driven brokerage headwinds; Q1 weather) .
Execution highlights: legacy business posted a “best‑ever operating expense margin”; core price 6.4%, C&D yield 4.1%, and volumes +1.6% YoY; sustainability EBITDA grew double‑digits; WM Healthcare Solutions delivered $110M adjusted EBITDA and synergies remain on track toward the high end of $80–$100M in 2025 .
Catalysts: higher full‑year margin/FCF outlook despite a modest revenue trim, visible RNG offtake (≈90% locked for 2025) and improving healthcare SG&A run‑rate; continued landfill volume/internalization strength and disciplined residential portfolio pruning .

What Went Well and What Went Wrong

What Went Well
- Best‑ever operating expense margin in the legacy business drove double‑digit EBITDA growth; adjusted EBITDA margin reached 31.3% in legacy and 29.9% total .
- Landfill volume strength (including special waste) and price discipline (core price 6.4%) powered C&D margin to 37.9% (adjusted) .
- “We also grew operating EBITDA by double digits in both our Recycling Processing and Sales and WM Renewable Energy segments,” underscoring sustainability project returns, per CEO Jim Fish .
What Went Wrong
- Revenue guide trimmed (now $25.275–$25.475B) primarily due to a decline in recycled commodity prices impacting low‑margin brokerage and harsh Q1 winter weather volumes .
- Healthcare remained margin dilutive to consolidated results (12.7% reported, 17.0% adjusted EBITDA margin), though sequential SG&A improved and synergies are ramping .
- Residual headwinds: loss of a sizable residential contract weighed on C&D volumes mix; ongoing alternative fuel tax credit expiration is a 30 bps margin headwind discussed earlier in the year .

Financial Results

Headline results vs prior periods and consensus

Metric	Q4 2024	Q1 2025	Q2 2025 Actual	Q2 2025 Consensus
Revenue ($B)	$5.89	$6.02	$6.43	$6.35*
Operating EBITDA ($B)	$1.71 (Adj)	$1.72 (Adj)	$1.92 (Adj)	$1.87*
Diluted EPS (GAAP)	$1.48	$1.58	$1.80	—
Diluted EPS (Adj)	$1.70	$1.67	$1.92	$1.89*

Notes: Adjusted = as reported by WM. Consensus cells marked with * are Values retrieved from S&P Global.

Segment net revenue (Q2) and YoY

Segment Net Revenue ($MM)	Q2 2024	Q2 2025
Collection & Disposal	$4,922	$5,281
Recycling Processing & Sales	$405	$381
WM Renewable Energy	$69	$115
WM Healthcare Solutions	—	$646
Corporate & Other	$6	$7
Total	$5,402	$6,430

Segment EBITDA and margins (Q2)

Segment (Q2)	Adj Operating EBITDA ($MM)	Adj EBITDA Margin
Collection & Disposal (2024 → 2025)	$1,838 → $2,003	37.3% → 37.9%
Recycling Processing & Sales (2024 → 2025)	$60 → $70	14.8% → 18.4%
WM Renewable Energy (2024 → 2025)	$27 → $53	39.1% → 46.1%
WM Healthcare Solutions (2025)	$110	17.0%
WM Legacy Business (2024 → 2025)	$1,618 → $1,813	30.0% → 31.3%
Total WM (2024 → 2025)	$1,618 → $1,923	30.0% → 29.9%

Operating KPIs and cash generation

KPI	Q1 2025	Q2 2025
Core Price	6.5%	6.4%
C&D Yield	4.0%	4.1%
C&D Volume YoY	Flat (workday-adjusted)	+1.6%
Legacy OpEx as % of Revenue (Adj)	60.4%	59.4%
Legacy SG&A as % of Revenue (Adj)	9.6%	9.3%
WMHS SG&A as % of Revenue (Adj)	23.6%	20.9%
Internalization (disposal cost basis)	70.7%	71.9%
Landfill Depletable Tons (MM)	29.3	34.7
Free Cash Flow ($MM)	$475	$818

Non‑GAAP adjustments and tax context

Q2 adjusted EPS added $0.12 from excluding acquisition/integration costs ($37MM pre‑tax) and other charges ($27MM pre‑tax); adjusted ETR 21.8% in Q2 .
Management reiterated that non‑GAAP reconciliations and definitions are provided, and operating EBITDA excludes DDA by definition .

Guidance Changes

Metric	Period	Previous Guidance (Jan 30, 2025)	Current Guidance (Jul 28, 2025)	Change
Revenue	FY 2025	$25.55B–$25.80B	$25.275B–$25.475B	Lowered
Adjusted Operating EBITDA	FY 2025	$7.45B–$7.65B (midpoint $7.55B)	$7.475B–$7.625B (midpoint affirmed $7.55B)	Narrowed/Affirmed midpoint
Adjusted EBITDA Margin	FY 2025	29.2%–29.7%	29.6%–29.9%	Raised
Free Cash Flow	FY 2025	$2.675B–$2.775B	$2.8B–$2.9B	Raised
Commodity Assumption (Single‑stream)	FY 2025	~$85/ton	~$80/ton	Lowered
RNG offtake (context)	2025	~50% presold at ~$28.80/MMBtu	≈90% of 2025 offtake locked (call commentary)	Increased coverage
Pricing Framework (C&D)	2025	Core 5.8%–6.2%; Yield 4.0%–4.2%; Vol 0.25%–0.75%	Trend consistent; legacy margin raised, revenue lowered	Mixed

Reasons cited: recycled commodity price declines affecting low‑margin brokerage; harsh Q1 winter volumes; bonus depreciation restoration increased FCF; synergy/price‑cost/mix improved margin outlook .

Earnings Call Themes & Trends

Topic	Q4 2024 (Jan 30)	Q1 2025 (Apr 29)	Q2 2025 (Jul 29)	Trend
Technology/Automation & Connected Fleet	Record OpEx <61%; route automation; labor efficiency	Continued efficiency; 6th straight quarter OpEx ≤61%	“Record” period with OpEx <60%; telematics improving R&M	Improving structural cost base
Sustainability (RNG/Automation)	+$190M 2025 EBITDA from projects; 7 RNG plants done by YE’24	Tracking plan; strong recycling automation benefits	Double‑digit EBITDA growth in Recycling & RNG; 3 projects started; ≈90% RNG offtake locked	Execution on plan, visibility up
Healthcare (Stericycle) Integration/ERP	Doubling synergy target to $250M by 2027; ERP work ahead	$16M Q1 synergies; SG&A down 70 bps seq; internalization to ramp H2	On track for upper end $80–$100M 2025; WMHS adj EBITDA $110M; SG&A 20.9%	Synergies ramping; cost structure improving
Macro/Industrial & Volumes	Industrial soft; landfill MSW steady; special waste pipeline positive	Weather affected Q1; volumes improved Mar/Apr	C&D volumes +1.6% YoY; wildfire special waste benefit; resi contract loss offset	Sequential improvement; mixed by line
Tariffs/Capex Sensitivity	Minimal 2025 impact; locked equipment	Low single‑digit $MM impact; fleet deliveries front‑loaded	No change; project execution continued	Managed exposure
Regulatory (PFAS)	—	Passive receiver exemption seen constructive (PFAS)	—	Monitoring; potential special waste upside

Management Commentary

CEO Jim Fish: “Our Collection and Disposal business produced robust organic revenue growth and margin expansion, achieving the Company’s best‑ever operating expense margin… We also grew operating EBITDA by double digits in both our Recycling Processing and Sales and WM Renewable Energy segments” .
CFO Devina Rankin: “WM’s legacy business delivered 130 bps of margin expansion… These positives were slightly offset by the expiration of alternative fuel tax credits, which had a negative 30 bps impact for the quarter” .
CSO Tara Hemmer (RNG): “For 2025, we have 90% of our offtake locked up… our RIN price for this quarter was about $2.55… above market… We expect margins to be similar throughout the balance of 2025” .

Q&A Highlights

Margin cadence: Management sees legacy margin expansion > target in H1; Q3 typically strongest; healthcare drag lessens 10–20 bps in H2 as synergies ramp .
Volume outlook: Full‑year C&D volumes still 0.25%–0.75% despite Q1 weather and a large resi contract loss; wildfire‑related special waste peaked in Q2 .
Healthcare synergies: On track for upper end of $80–$100M 2025; mix shifts from SG&A early to internalization later; longer‑term run‑rate ramps into 2026 .
RNG commercialization: ≈90% 2025 offtake locked; forward‑selling strategy supports above‑market realized RIN pricing in Q2; 2026 ~30% locked so far .

Estimates Context

Q2 2025 vs consensus: Revenue $6.43B vs $6.35B*; Adj EBITDA $1.923B vs $1.873B*; Adj EPS $1.92 vs $1.89*; 20 EPS and 19 revenue estimates (beats across key lines). Values retrieved from S&P Global.
Implication: modest estimate upside from higher full‑year margin and FCF outlook, with revenue trimmed on brokerage mix; Street likely to lift 2025 margin/FCF assumptions while tempering recycling brokerage revenue.

Key Takeaways for Investors

Quality beat and higher margin/FCF guide demonstrate pricing power, mix benefits, and structural cost improvements (connected fleet, automation) .
Commodity reset narrows revenue but improves margin (brokerage mix), softening top‑line optics while supporting cash conversion .
Healthcare integration is progressing: SG&A falling and internalization to accelerate H2/H1’26; WMHS moves from dilutive toward accretive margins through 2026 .
Sustainability flywheel is working: double‑digit Recycling/RNG EBITDA growth, project pipeline advancing, and 2025 RNG offtake largely de‑risked .
Landfill network advantage and rising internalization continue to drive pricing and volume capture; special waste pipelines remain supportive .
Multi‑year FCF compounding remains intact with bonus depreciation restoring uplift; deleveraging path supported by earnings growth .
Near‑term focus: watch commodity trajectory, healthcare synergy execution, and C&D volume cadence into H2 (seasonally strong), plus incremental tuck‑in M&A .

Appendix: Additional detail and source tables are included within each section above. All consensus figures marked with * are Values retrieved from S&P Global.

WASTE MANAGEMENT INC (WM)·Q2 2025 Earnings Summary