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WM

WASTE MANAGEMENT INC (WM)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $6.443B and adjusted EPS was $1.98; revenue came in slightly below Wall Street consensus ($6.496B*) and adjusted EPS slightly missed ($2.01*), while GAAP diluted EPS was $1.49 .
  • Total operating EBITDA margin reached a record 30.6%, with WM Legacy business margin at 32.0% and Collection & Disposal adjusted margin at 38.4% .
  • FY 2025 guidance: margin range raised to 29.6–30.2%, adjusted operating EBITDA affirmed at $7.475–$7.625B, FCF reaffirmed at $2.8–$2.9B; total revenue now expected ~$25.275B (low end of prior range) given weaker recycled commodity pricing and modestly lower Healthcare Solutions revenue .
  • Management reiterated a 2026 free cash flow outlook “approaching $3.8B,” citing harvesting of sustainability investments, normalization of fleet capex, and synergy tailwinds in Healthcare Solutions .

What Went Well and What Went Wrong

What Went Well

  • Record margin performance: “Total company operating EBITDA margin was 30.6%... WM’s legacy business achieved 32%” .
  • Operational execution: “Collection and disposal operating EBITDA margins expanding to a record 38.4%... with every line of business contributing” .
  • Sustainability businesses resilience despite commodity headwinds: “Even as recycled commodity prices declined nearly 35%... recycling segment’s operating EBITDA grew by 18%” .
  • Quote: “2026 is setting up to be a year of harvesting the benefits of our investments... free cash flow approaching $3.8 billion” — Jim Fish .

What Went Wrong

  • Recycled commodity pricing pressure: blended average single-stream price ~$68/ton vs ~$101/ton last year; recycling revenue down $60M YoY .
  • Healthcare Solutions top line modestly below expectations due to disciplined customer engagement, credits to clear AR, and deferred price increases (ERP stabilization period) .
  • Non-GAAP adjustments driven by impairments: $152M (plastic film PCR plant idled), $45M (accelerated landfill closure), $11M (renewables contract termination), weighing on GAAP EPS .

Financial Results

Consolidated Results vs Prior Periods

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$5.609 $6.018 $6.430 $6.443
Adjusted EPS ($)$1.96 $1.67 $1.92 $1.98
GAAP Diluted EPS ($)$1.88 $1.58 $1.80 $1.49
Adjusted Operating EBITDA ($USD Billions)$1.711 $1.715 $1.923 $1.970
Adjusted Operating EBITDA Margin (%)30.5% 28.5% 29.9% 30.6%
Net Income ($USD Millions)$760 $637 $726 $603

Actual vs Wall Street Consensus (S&P Global)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions) Actual vs Consensus$6.018 vs $6.105*$6.430 vs $6.354*$6.443 vs $6.496*
Adjusted EPS ($) Actual vs Consensus$1.67 vs $1.586*$1.92 vs $1.886*$1.98 vs $2.013*
# of Estimates (EPS / Revenue)19 / 17*20 / 19*22 / 21*

Values retrieved from S&P Global.*

Segment Breakdown (Net Operating Revenue and Adjusted Operating EBITDA)

SegmentQ3 2024 Net Revenue ($MM)Q3 2025 Net Revenue ($MM)Q3 2024 Adj. Op. EBITDA ($MM)Q3 2025 Adj. Op. EBITDA ($MM)Q3 2025 Adj. Margin
Collection & Disposal$5,084 $5,815 $1,899 $2,043 38.4%
Recycling Processing & Sales$432 $372 $55 $65 17.5%
WM Renewable Energy$87 $115 $44 $48 41.7%
WM Healthcare Solutions—$628 —$110 17.5%
Corporate & Other$6 $7 ($287) ($296) N/A

KPIs

KPIQ3 2024Q3 2025
Core Price (Collection & Disposal)—6.0%
Collection & Disposal Yield—3.8%
Collection & Disposal Volume Change—+0.2%
MSW Yield6.0% (9M) 6.7% (Q3)
Landfill Volume Growth—+5.2% (Q3 commentary)
Internalization of Waste (Disposal cost basis)69.6% 71.9%
Landfill Depletable Tons (mm)32.9 33.7
Free Cash Flow ($MM)$618 $821

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Operating EBITDA ($B)FY 2025$7.475–$7.625 (affirmed in Q2) $7.475–$7.625 Maintained
Adjusted Operating EBITDA Margin (%)FY 202529.6–29.9% 29.6–30.2% Raised
Free Cash Flow ($B)FY 2025$2.8–$2.9 (raised in Q2 from initial) $2.8–$2.9 Maintained
Total Company Revenue ($B)FY 2025$25.275–$25.475 ~$25.275 (low end) Lowered to low end
Single-Stream Commodity Price Assumption ($/ton)FY 2025~$80 ~$75 Lowered
Dividend (Quarterly)Q3 2025—$0.825 per share, payable 9/26/2025 Declared

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Margin expansionLegacy margin ~30% for 4th straight quarter Legacy margin 31.3% Record total margin 30.6%; legacy 32% Strengthening
Pricing & yieldCore price 6.5%; yield 4.0% Core price 6.4%; yield 4.1% Core price 6.0%; yield 3.8%; strong MSW yield 6.7% Stable/Disciplined
Volume trendsFlat C&D volumes (workday-adjusted) Volumes +1.6%; landfill strong Industrial volume positive for first time since 2022; landfill volumes +5.2% Improving
Recycling commoditiesPrice ~$88/ton; resilience ~$82/ton; guidance lowered ~$68/ton; expect ~$65–68/ton Q4; recovery likely 2026 Near-term headwind
RNG & RINsInvestments progressing Projects ramping; RIN $2.53 2026 offtake ~45% pre-sold; RINs 2026 seen $2.20–$2.30 Building visibility
Healthcare Solutions (ERP/pricing)On-track synergies Margins sequentially improving Stabilization through Q1 2026; deferred PIs & credits; segment adj. margin 17.5% Improving operations; revenue paced
M&A/capital allocation—~$450–500MM 2025 solid waste M&A 2026 M&A likely $100–$200MM; expect substantial buybacks with ~$3.8B FCF Normalizing M&A; buybacks up

Management Commentary

  • “Our team delivered another strong quarter... operating EBITDA growth of more than 15% and free cash flow growth of nearly 33%... 2026 is setting up to be a year of harvesting the benefits... free cash flow approaching $3.8 billion.” — Jim Fish, CEO .
  • “Total company operating EBITDA margin was 30.6%... WM’s legacy business achieved operating EBITDA margin of 32%... margin expansion from mix optimization, efficiencies, scaling sustainability, and cost reduction.” — Devina Rankin, CFO .
  • “Industrial up 1.2%, our first positive quarter since 2022... landfill volumes rose 5.2%... pricing strategy syndicated more effectively gives us confidence.” — John Morris, COO .

Q&A Highlights

  • Healthcare Solutions: Revenue moderation from disciplined customer engagement; deferred price increases and credits to fix AR; stabilization phase through Q1 2026; churn limited and offset by cross-sell, with ~$200MM renewals at low double-digit PIs .
  • Impairments: $152M for flexible plastics PCR plant (market-driven pause), $45M landfill closure, $11M renewables contract termination .
  • Wildfire work: ~$115MM revenue YTD concentrated in Q2; minimal Q3 impact; solid waste segment EBITDA growth of ~$145MM achieved without wildfire tailwind .
  • RNG commercialization: ~45% 2026 offtake pre-sold; balance split between transportation and voluntary markets; RIN price expectations $2.20–$2.30 .
  • Capital allocation: 2026 M&A $100–$200MM baseline; anticipate substantial share repurchases with ~$3.8B FCF .

Estimates Context

  • Q3 2025: Revenue $6.443B vs $6.496B consensus*; Adjusted EPS $1.98 vs $2.01 consensus* — modest misses. Q2 2025: Beats on both EPS and revenue; Q1 2025: EPS beat, revenue slightly below [GetEstimates].
  • Q4 2025 consensus: EPS $1.94*; revenue ~$6.391B* [GetEstimates].
  • With margin guidance raised and commodity pricing weaker, we expect consensus models to adjust: lower revenue for recycling-sensitive lines, higher margin assumptions consistent with execution in collection/disposal and RIN sales timing .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Margin durability is the core narrative; Collection & Disposal adjusted margin at 38.4% and total margin at 30.6% signal structural improvement from fleet/tech/retention and pricing discipline .
  • Near-term revenue headwinds from recycled commodities are manageable; automation and contract structures are cushioning EBITDA, with commodity recovery likely in 2026 .
  • Healthcare Solutions execution is improving; expect revenue normalization post ERP stabilization (by end Q1 2026) and synergy tailwinds to be more visible through 2026 .
  • 2026 FCF “approaching $3.8B” is a key catalyst for buybacks/dividends/M&A; management telegraphed substantial repurchases next year .
  • RNG commercialization has improved visibility with ~45% 2026 offtake pre-sold and supportive RIN price curve; Q4 RIN sales expected to be margin-accretive .
  • Watch recycled commodity pricing and Healthcare Solutions revenue cadence; consensus may need to lower revenue while raising margin/FCF conversion assumptions .
  • Dividend support remains strong with $0.825 quarterly declared in Q3; balance sheet levered ~3.3x and trending to 2.5–3.0x by mid-2026, supporting shareholder returns .