What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-13 compared with 2023-02-07 · 425 added, 449 removed, 1185 unchanged (42% of the section changed)

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Waste Management, Inc.

To the Stockholders and the Board of Directors of Waste Management, Inc.

Opinion on Internal Control Over Financial Reporting

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Waste Management, Inc.

To the Stockholders and the Board of Directors of Waste Management, Inc.

Opinion on the Financial Statements

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Significant assumptions used in the calculation of the rates include:

estimated future development costs associated with the construction and retirement of the landfill, estimated remaining permitted and expansion airspace, airspace utilization factors, and projected timing of retirement activities.

estimated future development costs associated with the construction and retirement of the landfill, estimated remaining permitted and expansion airspace, and airspace utilization factors.

How We Addressed the Matter in Our Audit

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In addition, we considered the professional qualifications and objectivity of management’s internal engineers responsible for developing the assumptions.

We involved EY’s engineering specialists to assist with the evaluation of the Company’s landfill future development cost and airspace assumptions.

We involved EY engineering specialists to assist with the evaluation of the Company’s landfill future development cost and airspace assumptions.

We also tested the completeness and accuracy of the historical data utilized in the development of the landfill depletion rates.

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Auditing the landfill asset retirement obligation is complex due to the highly judgmental nature of the assumptions used in the measurement process.

These assumptions include:

estimated future costs associated with the capping, closure and post closure activities at each specific landfill;

airspace consumed to date in relation to total estimated permitted and expansion airspace;

and the projected timing of retirement activities.

Significant assumptions include:

estimated future costs associated with the capping, closure and post closure activities at each specific landfill, airspace consumed to date in relation to total estimated permitted and expansion airspace and the projected remaining landfill life.

How We Addressed the Matter in Our Audit

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Net gain on disposal of assets

(Gain) loss from divestitures, asset impairments and other, net

Goodwill impairment

(Gain) loss from divestitures, asset impairments (other than goodwill) and other, net

Equity in net losses of unconsolidated entities, net of dividends

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Noncontrolling

Income (Loss)

(Loss) Income

Balance, December 31, 2020

Adoption of new accounting standards

Consolidated net income

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Common stock repurchase program

Acquisitions and other, net

Balance, December 31, 2022

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Common stock repurchase program

Acquisitions and other, net

Balance, December 31, 2023

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We are North America’s leading provider of comprehensive environmental solutions, providing services throughout the United States (“U.S.”) and Canada.

We partner with our residential, commercial, industrial and municipal customers and the communities we serve to manage and reduce waste at each stage from collection to disposal, while recovering valuable resources and creating clean, renewable energy.

Our “Solid Waste” business is operated and managed locally by our subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, and recycling and resource recovery services.

Through our subsidiaries, including our Waste Management Renewable Energy (“WM Renewable Energy”) business, we are also a leading developer, operator and owner of landfill gas-to-energy facilities in the U.S and Canada that produce renewable electricity and renewable natural gas, which is a significant source of fuel for our natural gas fleet.

Our senior management evaluates, oversees and manages the financial performance of our Solid Waste operations through two operating segments.

Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada.

Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada.

Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal.

The East and West Tiers are presented in this report and constitute our existing Solid Waste business.

On October 30, 2020, we acquired Advanced Disposal Services, Inc.

(“Advanced Disposal”), the operations of which are presented in this report within our existing Solid Waste tiers.

We also provide additional services that are not managed through our Solid Waste business, which are presented in this report as “Other.” Additional information related to our acquisition of Advanced Disposal and segments is included in Notes 17 and 19, respectively.

We partner with our customers and the communities we serve to manage and reduce waste at each stage from collection to disposal, while recovering valuable resources and creating clean, renewable energy.

Our solid waste business is operated and managed locally by our subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, recycling and resource recovery services.

and Canada that produce renewable electricity and renewable natural gas, which is a significant source of fuel that we allocate to our natural gas fleet.

To enhance transparency regarding our financial performance, highlight the strength and consistency of our core solid waste businesses, and underscore our commitment to sustainability through planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy businesses, beginning in the fourth quarter of 2023, our senior management revised its segment reporting to (i) reflect the financial results of our collection, transfer, disposal and resource recovery services businesses independently;

(ii) combine the results of all recycling facilities from our East and West Tier segments with our recycling brokerage and sales activities to form a newly created Recycling Processing and Sales reportable segment and (iii) include our WM Renewable Energy business as a reportable segment.

Accordingly, our senior management now evaluates, oversees and manages the financial performance of our business through four reportable segments, referred to as (i) Collection and Disposal - East Tier (“East Tier”);

(ii) Collection and Disposal - West Tier (“West Tier”);

(iii) Recycling Processing and Sales and (iv) WM Renewable Energy.

Our East and West Tier, along with certain ancillary services not managed through our tier segments, but that support our collection and disposal operations, form our “Collection and Disposal” businesses.

We also provide additional services not managed through our four reportable segments, which are presented as Corporate and Other.

Refer to Note 19 for further discussion.

Reclassifications

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Sustained changes in inflation rates or the estimated costs, timing or extent of future final capping, closure and post-closure activities typically result in both (i) a current adjustment to the recorded liability and landfill asset and (ii) a change in liability and asset amounts to be recorded prospectively over either the remaining permitted and expansion airspace (as defined below) of the related discrete final capping event or the remaining permitted and expansion airspace of the landfill, as appropriate.

Any changes related to the capitalized and future cost of the landfill assets are then recognized in accordance with our landfill depletion policy (previously landfill amortization policy), which would generally result in depletion expense being recognized prospectively over the remaining permitted and expansion airspace of the final capping event or the remaining permitted and expansion airspace of the landfill, as appropriate.

Any changes related to the capitalized and future cost of the landfill assets are then recognized in accordance with our landfill depletion policy, which would generally result in depletion expense being recognized prospectively over the remaining permitted and expansion airspace of the final capping event or the remaining permitted and expansion airspace of the landfill, as appropriate.

Changes in such estimates associated with a fully

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

such estimates associated with a fully consumed landfill result in an adjustment to the recorded liability and landfill assets with an immediate corresponding adjustment to landfill airspace depletion expense.

consumed landfill result in an adjustment to the recorded liability and landfill assets with an immediate corresponding adjustment to landfill airspace depletion expense.

Interest accretion on final capping, closure and post-closure liabilities is recorded using the effective interest method and is recorded as landfill operating costs, which is included in operating expenses within our Consolidated Statements of Operations.

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If no amount within a range appears to be a better estimate than any other, we use the amount that is the low end of such range.

If we used the high ends of such ranges, our aggregate potential liability would be approximately $ 135 million higher than the $ 204 million recorded in the Consolidated Balance Sheet as of December 31, 2022.

If we used the high ends of such ranges (where estimable), our aggregate potential liability would be approximately $ 85 million higher than the $ 209 million recorded in the Consolidated Balance Sheet as of December 31, 2023.

Our ultimate responsibility may differ materially from current estimates.

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Treasury bonds with a term approximating the weighted average period until settlement of the underlying obligation.

We determine the risk-free discount rate and the inflation rate on an annual basis unless interim changes would materially impact our results of operations.

For remedial liabilities that have been discounted, we include interest accretion, based on the effective interest method, in operating expenses in our Consolidated Statements of Operations.

As of December 31, 2022, 2021 and 2020, we inflated the costs by 2.50 %, 2.25 % and 2.25 %, respectively, and discounted the costs by 3.75 %, 1.50 % and 1.00 %, respectively.

Our discount rate has increased since 2020 as a result of the overall increase in the 10-year Treasury rates.

The following table summarizes the impacts of revisions in the risk-free discount rate applied to our environmental remediation liabilities and recovery assets for the year ended December 31 (in millions) and the risk-free discount rate applied as of December 31:

Increase (decrease) in operating expenses

Risk-free discount rate applied to environmental remediation liabilities and recovery assets

The portion of our recorded environmental remediation liabilities that were not subject to inflation or discounting, as the amounts and timing of payments are not fixed or reliably determinable, was $ 31 million as of December 31, 2022 and 2021.

Had we not inflated and discounted any portion of our environmental remediation liability, the amount recorded would have increased by $ 10 million and decreased by $ 6 million as of December 31, 2022 and 2021, respectively.

Property and Equipment (exclusive of landfills, discussed above)

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When property and equipment are retired, sold or otherwise disposed of, the cost and accumulated depreciation are removed from our accounts and any resulting gain or loss is included in results of operations as an offset or increase to operating expense for the period.

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The estimated useful lives for significant property and equipment categories are as follows (in years):

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Vehicles — rail haul cars

Machinery and equipment — including containers

Machinery and equipment (a)

Buildings and improvements

Furniture, fixtures and office equipment

(a) Includes recycling and renewable natural gas (“RNG”) facilities as well as containers.

We lease property and equipment in the ordinary course of our business.

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Our leases have varying terms.

Some may include renewal or purchase options, escalation clauses, restrictions, penalties or other obligations that we consider in determining minimum lease payments.

Some may include renewal or purchase

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options, escalation clauses, restrictions, penalties or other obligations that we consider in determining minimum lease payments.

The leases are classified as either operating leases or financing leases, as appropriate.

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We have recognized liabilities for these contingent obligations based on their estimated fair value as of the date of acquisition with any differences between the acquisition-date fair value, subsequent remeasurements and the ultimate settlement of the obligations being recognized as an adjustment to income from operations.

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Refer to Note 11 for adjustments recognized during the reported periods.

Acquired Assets and Assumed Liabilities — Assets and liabilities arising from contingencies such as pre-acquisition environmental matters and litigation are recognized at their acquisition-date fair value when their respective fair values can be determined.

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All acquisition-related transaction costs are expensed as incurred.

See Note 17 for additional information related to our acquisitions, including our 2020 acquisition of Advanced Disposal.

See Note 17 for additional information related to our acquisitions.

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Goodwill and Other Intangible Assets

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We assess our long-lived assets for impairment as required under the applicable accounting standards.

If necessary, impairments are recorded in (gain) loss from divestitures, asset impairments and unusual items, net in our Consolidated Statement of Operations.

If necessary, impairments are recorded in (gain) loss from divestitures, asset impairments and unusual items, net in our Consolidated Statements of Operations.

Property and Equipment, Including Landfills and Definite-Lived Intangible Assets — We monitor the carrying value of our long-lived assets for potential impairment on an ongoing basis and test the recoverability of such assets generally using significant unobservable (“Level 3”) inputs whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

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Fair value is generally determined by considering (i) internally developed discounted projected cash flow analysis of the asset or asset group;

(ii) actual third-party valuations and/or (iii) information available regarding the current market for similar assets.

(ii) third-party valuations and/or (iii) information available regarding the current market for similar assets.

Estimating future cash flows requires significant judgment and projections may vary from the cash flows eventually realized, which could impact our ability to accurately assess whether an asset has been impaired.

The assessment of impairment indicators and the recoverability of our capitalized costs associated with landfills and related expansion projects require significant judgment due to the unique nature of the waste industry, the highly regulated permitting process and the sensitive estimates involved.

During the review of a landfill expansion application, a regulator

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may initially deny the expansion application although the expansion permit is ultimately granted.

During the review of a landfill expansion application, a regulator may initially deny the expansion application although the expansion permit is ultimately granted.

In addition, management may periodically divert waste from one landfill to another to conserve remaining permitted landfill airspace, or a landfill may be required to cease accepting waste, prior to receipt of the expansion permit.

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Indefinite-Lived Intangible Assets, Including Goodwill — At least annually using a measurement date of October 1, and more frequently if warranted, we assess our indefinite-lived intangible assets, including the goodwill of our reporting units, for impairment.

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We first perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value.

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WMI pays an annual premium to the insurance captive on behalf of WMI and its insured subsidiaries, typically in the first quarter of the year, for estimated losses based on an external actuarial analysis.

These premiums are held in a restricted funds account to be used solely for paying insurance claims, resulting in a transfer of risk from our Company to

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the insurance captive, and are allocated between current and long-term assets depending on estimated timing of the use of funds.

These premiums are held in a restricted funds account to be used solely for paying insurance claims, resulting in a transfer of risk from our Company to the insurance captive, and are allocated between current and long-term assets depending on estimated timing of the use of funds.

Restricted Funds

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Balances maintained in these restricted funds accounts will fluctuate based on (i) changes in statutory requirements;

(ii) future deposits made to comply with contractual arrangements;

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deposits made to comply with contractual arrangements;

(iii) the ongoing use of funds;

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(iii) a market or income approach, as deemed appropriate and/or (iv) a quantitative approach, or measurement alternative, as noted above.

Impairments of our investments are recorded in equity in net losses of unconsolidated entities or other, net in our Consolidated Statements of Operations in accordance with appropriate accounting guidance.

Refer to Note 11 for information related to impairments and other adjustments recognized during the reported periods.

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Impairments of our investments are recorded in (gain) loss from divestitures, asset impairments and unusual items, net in our Consolidated Statements of Operations in accordance with appropriate accounting guidance.

Refer to Note 11, Note 12 and Note 16 for information related to impairments and other adjustments recognized during the reported periods.

Foreign Currency

We have operations in Canada, as well as certain support functions in India.

Our operations are primarily in the U.S.

but we also have significant operations in Canada.

Additionally, we have certain support functions in India.

Local currencies generally are considered the functional currencies of our operations and investments outside the U.S.

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The resulting translation difference is reflected as a component of other comprehensive income (loss).

Foreign currency translation adjustments have been impacted by decreases in the U.S.

dollar/Canadian dollar exchange rate from 1.2734 at December 31, 2020, to 1.2639 at December 31, 2021 and to 1.3554 at December 31, 2022.

Foreign currency translation adjustments have primarily been impacted by fluctuations in the U.S.

dollar/Canadian dollar exchange rate which was 1.3243 at December 31, 2023, 1.3554 at December 31, 2022 and 1.2639 at December 31, 2021.

Refer to Note 12 for information regarding the impacts of foreign currency on our comprehensive income and results of operations.

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Revenue Recognition

Our Solid Waste operating revenues are primarily generated from fees charged for our collection, transfer, disposal, and recycling and resource recovery services, and from sales of commodities by our recycling and landfill gas-to-energy operations.

Revenues from our collection operations are influenced by factors such as collection frequency, type of collection equipment furnished, type and volume or weight of the waste collected, distance to the disposal facility or material recovery facility and our disposal costs.

Revenues from our landfill operations consist of tipping fees, which are generally based on the type and weight or volume of waste being disposed of at our disposal facilities.

Fees charged at transfer stations are generally based on the weight or volume of waste deposited, taking into account our cost of loading, transporting and disposing of the solid waste at a disposal site.

Recycling revenues generally consist of tipping fees and the sale of recycling commodities to third parties.

The fees we charge for our services generally include our environmental, fuel surcharge and regulatory recovery fees, which are intended to pass through to customers direct and indirect costs incurred.

We also provide additional services that are not managed through our Solid Waste business, including our Strategic Business Solutions (“WMSBS”) and sustainability businesses, which include landfill gas-to-energy services, Sustainability and Environmental Solutions (“SES”) business and recycling brokerage services.

We also offer certain other expanded service offerings and solutions.

We generally recognize revenue as services are performed or products are delivered.

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These advanced billings are included in deferred revenues and recognized as revenue in the period service is provided.

Our Collection and Disposal operating revenues are primarily generated from fees charged for our collection, transfer and disposal.

Revenues from our landfill operations consist of tipping fees, which are generally based on the type and weight or volume of waste being disposed of at our disposal facilities.

Fees charged at transfer stations are generally based on the weight or volume of waste deposited, considering our cost of loading, transporting and disposing of the solid waste at a disposal site.

The fees we charge for our services generally include applicable fees, such as our energy surcharge, which are intended to pass through to customers direct and indirect costs incurred.

Recycling Processing and Sales revenues generally consist of tipping fees and the sale of recycling commodities to and/or on behalf of third parties.

Our WM Renewable Energy revenue is primarily generated from (i) the sale of captured and converted landfill methane gas;

(ii) the sale of Renewable Identification Numbers (“RINs”) under the Renewable Fuel Standard (“RFS”) program implemented by the U.S.

Environmental Protection Agency (“EPA”);

(iii) sale of Low Carbon Fuel credits designed to stimulate the use of low-carbon fuels and (iv) the sale of energy (electricity and capacity) and associated Renewable Energy Credits (“RECs”).

See Note 19 for additional information related to revenue by reportable segment and major lines of business.

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Contract acquisition costs that are paid to the customer are deferred and amortized as a reduction in revenue over the contract life.

Our contract acquisition costs are classified as current or noncurrent based on

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the timing of when we expect to recognize amortization and are included in other assets in our Consolidated Balance Sheets.

Our contract acquisition costs are classified as current or noncurrent based on the timing of when we expect to recognize amortization and are included in other assets in our Consolidated Balance Sheets.

As of December 31, 2023 and 2022, we had $ 207 million and $ 192 million of deferred contract costs, respectively, of which $ 148 million and $ 137 million, respectively, were related to deferred sales incentives.

During each of the years ended December 31, 2023, 2022 and 2021, we amortized $ 26 million, $ 24 million and $ 23 million, respectively, of sales incentives to selling, general and administrative expense.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Long-Term Contracts

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It is difficult to predict the outcome of litigation, as it is subject to many uncertainties.

Additionally, it is not always possible for management to make a meaningful estimate

Additionally, it is not always possible for management to make a meaningful estimate of the potential loss or range of loss associated with such contingencies.

See Note 10 for discussion of our commitments and contingencies.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of the potential loss or range of loss associated with such contingencies.

See Note 10 for discussion of our commitments and contingencies.

Internal-Use Software

We include capitalized costs associated with developing or obtaining internal-use software within long-term other assets, and these costs are amortized over the term of the relevant subscription period including any renewal options that are reasonably certain of being exercised.

These costs include direct external costs of materials and services used in developing or obtaining the software and internal costs for employees directly associated with the software development project.

As of December 31, 2022 and 2021, total costs capitalized for our internal-use software were $ 45 million and $ 48 million, respectively, net of accumulated amortization of $ 27 million and $ 11 million, respectively.

During each of the years ended December 31, 2022, 2021 and 2020, we amortized $ 16 million, $ 10 million and $ 1 million, respectively, to selling, general and administrative expense.

Supplemental Cash Flow Information

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See Note 8 for further discussion.

During 2022, we had $ 225 million of non-cash financing activities primarily from our federal low-income housing investment and new financing leases.

Additionally, we had approximately $ 135 million of non-cash investing activities related to non-cash consideration transferred as part of our acquisitions in 2022.

During 2023, we had $ 276 million of non-cash financing activities primarily from our low-income housing investment and new financing leases, which are discussed further in Notes 6 and 8.

During 2022, we had $ 225 million of non-cash financing activities primarily from our low-income housing investment and new financing leases.

Additionally, we had approximately $ 25 million and $ 135 million of non-cash investing activities related to non-cash consideration transferred as part of our acquisitions in 2023 and 2022, respectively.

See Note 17 for further discussion of our 2022 acquisitions.

During 2021, we had $ 30 million of non-cash financing activities from new financing leases.

During 2020, we had $ 50 million of non-cash financing activities primarily related to new financing leases, a portion of which were attributed to our acquisition of Advanced Disposal.

Non-cash investing and financing activities are generally excluded from the Consolidated Statements of Cash Flows.

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Current (in accrued liabilities)

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The changes to landfill and environmental remediation liabilities for the year ended December 31, 2023 are reflected in the table below (in millions):

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Interest accretion

Revisions in estimates and interest rate assumptions (a)

Revisions in estimates and interest rate assumptions

Acquisitions, divestitures and other adjustments

December 31, 2023

(a) In 2021, the increase in our landfill liabilities for revisions in estimates and interest rate assumptions was $ 33 million.

The increase in our landfill liabilities in 2022 is primarily due to inflationary cost pressures that are expected to impact costs over the remaining landfill lives.

Our recorded liabilities as of December 31, 2022 include the impacts of inflating certain of these costs based on our expectations of the timing of cash settlement and of discounting certain of these costs to present value.

Anticipated payments of currently identified environmental remediation liabilities, as measured in current dollars, are $ 31 million in 2023, $ 43 million in 2024, $ 29 million in 2025, $ 19 million in 2026, $ 16 million in 2027 and $ 76 million thereafter.

Our recorded liabilities as of December 31, 2023 include the impacts of inflating certain of these costs based on our expectations of the timing of cash settlement.

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Property and Equipment

Property and equipment as of December 31 consisted of the following (in millions):

Machinery and equipment

Machinery and equipment (a)

Buildings and improvements

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Property and equipment, net

(a) As of December 31, 2023 and 2022, includes $ 1.5 billion and $ 1.1 billion, respectively, related to recycling facilities.

As of December 31, 2023 and 2022, includes $ 720 million and $ 570 million, respectively, related to RNG facilities .

See Note 11 for information regarding asset impairments.

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See Note 5 for information regarding amortization of our intangible assets.

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Goodwill and Other Intangible Assets

Goodwill was $ 9,254 million and $ 9,323 million as of December 31, 2023 and 2022, respectively.

The $ 295 million increase in goodwill during 2022 is primarily related to acquisitions.

As discussed in Note 2, we perform our annual impairment test of goodwill balances for our reporting units using a measurement date of October 1.

We will also perform interim tests if an impairment indicator exists.

See Notes 17 and 19 for additional information related to goodwill.

As a result of a longer-than-anticipated ramp toward full scale and profitability of a business engaged in accelerating film and plastic wrap recycling capabilities, we recorded a goodwill impairment charge of $ 168 million, with $ 22 million attributable to noncontrolling interests.

This charge was partially offset by the recognition of $ 46 million of income related to the reversal of a liability for contingent consideration associated with our investment in such business.

We have a controlling interest in the business, and it is, therefore, consolidated in our financial statements as part of our Recycling Processing and Sales segment.

Fair value of the business was estimated using an income approach based on long-term projected discounted future cash flows of the reporting unit.

Partially offsetting the decrease in our goodwill balance was a $ 90 million increase in goodwill associated with acquisitions primarily within our Collection and Disposal businesses.

See Notes 11 and 17 for additional information.

Goodwill is included within each segment’s total assets.

For segment reporting purposes, our recycling facilities and recycling brokerage services are included within our Recycling Processing and Sales segment.

Prior to 2023, our recycling facilities were reflected as a component of the respective Tier segments and our recycling brokerage services were included as a component of our “Other” operations.

Reclassifications have been made to our prior period consolidated financial

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information to conform to the current year presentation.

The following table presents changes in goodwill during the reported periods (in millions):

Collection and Disposal

Other Ancillary

Balance, December 31, 2021

Acquired goodwill

Divested goodwill

Foreign currency translation and other

Balance, December 31, 2022

Acquired goodwill

Divested goodwill

Foreign currency translation and other

Balance, December 31, 2023

Our other intangible assets consisted of the following as of December 31 (in millions):

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Amortization expense for other intangible assets was $ 129 million, $ 129 million and $ 143 million for 2023, 2022 and 2021, respectively.

The decrease in amortization expense in 2022 was primarily due to decreasing amortization under the 150% declining balance approach for intangible assets from the acquisition of Advanced Disposal.

Amortization expense for other intangible assets for 2021 increased, as compared with 2020, due to the amortization of acquired intangible assets related to our acquisition of Advanced Disposal.

Additional information related to other intangible assets acquired through business combinations is included in Note 17.

As of December 31, 2022 and 2021, we had $ 19 million of licenses, permits and other intangible assets that are not subject to amortization because they do not have stated expirations or have routine, administrative renewal processes.

As of December 31, 2023 and 2022, we had $ 21 million and $ 19 million, respectively, of licenses, permits and other intangible assets that are not subject to amortization because they do not have stated expirations or have routine, administrative renewal processes.

As of December 31, 2023, we expect annual amortization expense related to other intangible assets to be $ 119 million in 2024, $ 109 million in 2025, $ 86 million in 2026, $ 80 million in 2027 and $ 66 million in 2028.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the major components of debt as of each balance sheet date (in millions) and provides the maturities and interest rate ranges of each major category as of December 31:

Debt and Derivatives

The following table summarizes the major components of debt at principal amounts as of each balance sheet date (in millions) and provides the maturities and interest rate ranges of each major category as of December 31:

Commercial paper program (weighted average interest rate of 5.6 % as of December 31, 2023 and 4.9 % as of December 31, 2022)

Senior notes, maturing through 2050, interest rates ranging from 0.75 % to 7.75 % (weighted average interest rate of 3.7 % as of December 31, 2023 and 3.2 % as of December 31, 2022)

Term Loan maturing May 2024, interest rate of 5.1 % as of December 31, 2022

Term Loan, interest rate of 5.1 % as of December 31, 2022

Canadian senior notes, C$ 500 million maturing September 2026, interest rate of 2.6 %

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Debt Classification

As of December 31, 2022, we had approximately $ 3.1 billion of debt maturing within the next 12 months, including (i) $ 1.7 billion of short-term borrowings under our commercial paper program (net of related discount on issuance);

(ii) $ 725 million of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities;

(iii) $ 500 million of 2.4 % senior notes that mature in May 2023 and (iv) $ 192 million of other debt with scheduled maturities within the next 12 months, including $ 65 million of tax-exempt bonds.

As of December 31, 2023, we had approximately $ 2.8 billion of debt maturing within the next 12 months, including (i) $ 1.6 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities;

(ii) $ 859 million of short-term borrowings under our commercial paper program (net of related discount on issuance);

(iii) $ 175 million of other debt with scheduled maturities within the next 12 months, including $ 60 million of tax-exempt bonds, and (iv) $ 156 million of 3.5 % senior notes that mature in May 2024.

As of December 31, 2023, we have classified $ 2.4 billion of debt maturing in the next 12 months as long-term because we have the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity under our $ 3.5 billion long-term U.S.

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Access to and Utilization of Credit Facilities, Commercial Paper Program and Term Loan

$3.5 Billion Revolving Credit Facility — In May 2022, we amended and restated our $ 3.5 billion U.S.

and Canadian revolving credit facility extending the term through May 2027.

$3.5 Billion Revolving Credit Facility — Our $3.5 billion revolving credit facility, maturing May 2027, provides us with credit capacity to be used for cash borrowings, to support letters of credit and to support our commercial paper program.

The agreement includes a $ 1.0 billion accordion feature that may be used to increase total capacity in future periods, and we have the option to request up to two one-year extensions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The $3.5 billion revolving credit facility provides us with credit capacity to be used for cash borrowings, to support letters of credit or to support our commercial paper program.

The interest rates we pay on outstanding U.S.

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As of December 31, 2023, we had no outstanding borrowings under this facility.

We had $ 166 million of letters of credit issued and $ 1.7 billion of outstanding borrowings (net of related discount on issuance) under our commercial paper program, both supported by the facility, leaving unused and available credit capacity of $ 1.6 billion as of December 31, 2022.

We had $ 859 million of outstanding borrowings (net of related discount on issuance) under our commercial paper program and $ 180 million of letters of credit issued, both supported by the facility, leaving unused and available credit capacity of $ 2.5 billion as of December 31, 2023.

Commercial Paper Program — We have a commercial paper program that enables us to borrow funds for up to 397 days at competitive interest rates.

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The commercial paper program is fully supported by our $3.5 billion revolving credit facility.

As of December 31, 2022, we had $ 1.7 billion of outstanding borrowings (net of related discount on issuance) under our commercial paper program.

$1.0 Billion, Two-Year, Term Credit Agreement — In May 2022, we entered into a $ 1.0 billion, two-year , U.S.

term credit agreement (“Term Loan”) maturing May 2024 to be used for general corporate purposes.

The interest rate we pay on our outstanding balance is generally based on SOFR, plus a spread depending on WMI’s senior public debt rating assigned by Moody’s Investors Service, Inc.

As of December 31, 2023, we had $ 859 million of outstanding borrowings (net of related discount on issuance) under our commercial paper program.

Term Loan — In May 2022, we entered into a $ 1.0 billion, two-year , U.S.

term credit agreement maturing May 2024 (“Term Loan”) to support general corporate purposes.

WM Holdings guaranteed all obligations under our Term Loan.

The interest rate we paid on our Term Loan was generally based on SOFR, plus a spread depending on WMI’s senior public debt rating assigned by Moody’s Investors Service, Inc.

and Standard and Poor’s Global Ratings.

The spread above SOFR can range from 0.50 % to 0.90 % per annum, plus the SOFR Credit Adjustment Spread.

As of December 31, 2022, we had $ 1.0 billion of outstanding borrowings under our Term Loan.

WM Holdings also guarantees all of the obligations under the Term Loan.

Other Letter of Credit Lines — As of December 31, 2022, we had utilized $ 800 million of other uncommitted letter of credit lines with terms extending through April 2024.

Our Term Loan had a contractual maturity of May 2024, but we elected to repay all outstanding borrowings under our Term Loan in August 2023 with proceeds from our July 2023 senior notes issuance, which is discussed further below.

Other Letter of Credit Lines — As of December 31, 2023, we had utilized $ 834 million of other uncommitted letter of credit lines with terms extending through December 2027.

Debt Borrowings and Repayments

Commercial Paper Program — During the year ended December 31, 2023 we made cash repayments of $ 18.7 billion, which were partially offset by $ 17.8 billion of cash borrowings (net of related discount on issuance).

Term Loan — In May 2022, we borrowed $ 1.0 billion under our Term Loan for general corporate purposes.

Senior Notes — In May 2022, WMI issued $ 1.0 billion of 4.15 % senior notes due April 15, 2032, the net proceeds of which were $ 992 million.

We used the net proceeds to redeem our $ 500 million of 2.9 % senior notes due September 2022 in advance of their scheduled maturity, to repay a portion of outstanding borrowings under our commercial paper program and for general corporate purposes.

A portion of these borrowings were repaid with proceeds from our senior note issuances as discussed below.

Senior Notes — In February 2023, WMI issued $ 750 million and $ 500 million of 4.625 % senior notes due February 2030 and February 2033, respectively, the net proceeds of which were $ 1.24 billion.

We used the net proceeds to reduce outstanding borrowings under our commercial paper program, repay $ 500 million of WMI’s 2.4 % senior notes upon maturity in May 2023, and for general corporate purposes, including our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments.

In July 2023, WMI issued $ 750 million and $ 1.25 billion of 4.875 % senior notes due February 2029 and February 2034, respectively, the net proceeds of which were $ 1.97 billion.

We used the net proceeds to reduce outstanding borrowings under our commercial paper program, repay $ 1.0 billion of outstanding borrowings under our Term Loan and for general corporate purposes.

Term Loan — In August 2023, we repaid $ 1.0 billion of outstanding borrowings under our Term Loan with proceeds from our July 2023 senior notes issuance discussed above and contemporaneously terminated the facility.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Tax-Exempt Bonds — We issued $ 300 million of tax-exempt bonds in 2023.

The proceeds from the issuance of these bonds were deposited directly into a restricted trust fund and may only be used for the specific purpose for which the money was raised, which is generally to finance expenditures for solid waste disposal facility, material recovery facility and renewable natural gas facility construction and development.

The proceeds from the issuance of these bonds were deposited directly into a restricted trust fund to be used for the specific purpose for which the money was raised, which is generally to finance expenditures for solid waste disposal facility, recycling facility and renewable natural gas facility construction and development.

In 2023, we also repaid $ 65 million of our tax-exempt bonds with available cash at their scheduled maturities.

Financing Leases and Other — The increase in our financing leases and other debt obligations in 2022 is primarily related to a note payable associated with our federal low-income housing investment discussed in Note 8, which increased our debt obligations by $ 183 million.

Financing Leases and Other — The increase in our financing leases and other debt obligations in 2023 is primarily related to a note payable associated with our low-income housing investment discussed in Note 8, which increased our debt obligations by $ 183 million, and $ 93 million primarily related to non-cash financing leases.

The increase in our debt obligations was partially offset by $ 120 million of cash repayments of debt at maturity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Scheduled Debt Payments

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Our recorded debt and financing lease obligations include non-cash adjustments associated with debt issuance costs, discounts and fair value adjustments attributable to terminated interest rate derivatives, which have been excluded from these amounts because they will not result in cash payments.

As discussed above, we have the intent and ability to refinance certain 2023 scheduled maturities on a long-term basis, including our $500 million of 2.4% senior notes that mature in May 2023.

As discussed above, we have the intent and ability to refinance certain 2024 scheduled maturities on a long-term basis, including portions of our commercial paper borrowings and our $ 156 million of 3.5% senior notes that mature in May 2024.

See Note 7 below for further discussion of our financing lease arrangements.

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The terms of certain of our financing arrangements require that we comply with financial and other covenants.

Our most restrictive financial covenant is the one contained in both our $3.5 billion revolving credit facility and Term Loan, which sets forth a maximum total debt to consolidated earnings before interest, taxes, depreciation, depletion and amortization ratio (the “Leverage Ratio”).

Our most restrictive financial covenant is the one contained in our $3.5 billion revolving credit facility, which sets forth a maximum total debt to consolidated earnings before interest, taxes, depreciation, depletion and amortization ratio (the “Leverage Ratio”).

This covenant requires that the Leverage Ratio for the preceding four fiscal quarters will not be more than 3.75 to 1, provided that if an acquisition permitted under the $3.5 billion revolving credit facility involving aggregate consideration in excess of $ 200 million occurs during the fiscal quarter, the Company shall have the right to increase the Leverage Ratio to 4.25 to 1 during such fiscal quarter and for the following three fiscal quarters (the “Elevated Leverage Ratio Period”).

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As of December 31, 2023 and 2022, we were in compliance with our Leverage Ratio covenant.

Our $3.5 billion revolving credit facility, Term Loan, senior notes and other financing arrangements also contain certain restrictions on the ability of the Company’s subsidiaries to incur additional indebtedness as well as restrictions on the ability of the Company and its subsidiaries to, among other things, incur liens, engage in sale-leaseback transactions and engage in mergers and consolidations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our $3.5 billion revolving credit facility, senior notes and other financing arrangements also contain certain restrictions on the ability of the Company’s subsidiaries to incur additional indebtedness as well as restrictions on the ability of the Company and its subsidiaries to, among other things, incur liens, engage in sale-leaseback transactions and engage in mergers and consolidations.

We monitor our compliance with these restrictions, but do not believe that they significantly impact our ability to enter into investing or financing arrangements typical for our business.

As of December 31, 2023 and 2022, we were in compliance with all covenants and restrictions under our financing arrangements, in addition to our Leverage Ratio covenant, that may have a material effect on our Consolidated Financial Statements.

Our operating lease activities primarily consist of leases for real estate, landfills (refer to Note 2 for further detail) and operating equipment.

Interest Rate Derivatives

During 2023, we entered into treasury rate locks with a total notional value of $ 800 million to secure underlying interest rates associated with our senior notes issuances discussed above.

We designated our treasury rate locks as cash flow hedges.

These treasury rate locks were terminated contemporaneously with the related issuances of senior notes in 2023, and we received cash of $ 19 million to settle the related assets.

The deferred gains are being amortized as a decrease to interest expense over the ten-year life of the related senior notes issuances using the effective interest method.

Our operating lease activities primarily consist of leases for real estate, landfills (as discussed further in Note 2) and operating equipment.

Our financing lease activities primarily consist of leases for operating equipment, railcars and landfill assets.

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Certain leases also include options to purchase the leased property.

The depreciable life of assets and leasehold improvements is limited by the expected lease

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

term, unless there is a transfer of title or purchase option reasonably certain of exercise.

The depreciable life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Certain of our lease agreements include rental payments based on usage and other lease agreements include rental payments adjusted periodically for inflation;

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When the implicit interest rate is not readily available for our leases, we discount future cash flows of the remaining lease payments using the current interest rate that would be paid to borrow on collateralized debt over a similar term, or incremental borrowing rate, at the commencement date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Supplemental balance sheet information for our leases as of December 31 is as follows (in millions):

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Financing lease expense was $ 58 million, $ 55 million and $ 58 million during 2023, 2022 and 2021, respectively, and is included in depreciation, depletion and amortization expense and interest expense, net in our Consolidated Statements of Operations.

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Minimum contractual obligations for our leases (undiscounted) as of December 31, 2023 are as follows (in millions):

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Discounted lease liabilities

As of December 31, 2022, we entered into operating and financing leases, primarily for real estate and equipment, that have not yet commenced and therefore are not reflected in the table above, with future lease payments of $ 52 million and $ 50 million, respectively.

These leases commence through 2024 and have non-cancelable lease terms up to 17 years .

As of December 31, 2023, we entered into operating leases, primarily for real estate that have not yet commenced and therefore are not reflected in the table above, with future lease payments of $ 57 million.

These leases commence through 2024 and have lease terms up to 16 years .

Cash paid during 2023 for our operating and financing leases was $ 77 million and $ 60 million, respectively.

During 2022, right-of-use assets obtained in exchange for lease obligations for our operating and financing leases were $ 69 million and $ 33 million, respectively.

Cash paid during 2022 for our operating and financing leases was $ 76 million and $ 56 million, respectively.

During 2023, right-of-use assets obtained in exchange for lease obligations for our operating and financing leases were $ 62 million and

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$ 121 million, respectively.

During 2022, right-of-use assets obtained in exchange for lease obligations for our operating and financing leases were $ 69 million and $ 33 million, respectively.

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Income tax expense

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federal statutory income tax rate is reconciled to the effective income tax rate for the year ended December 31 as follows:

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Effective income tax rate

The comparability of our income tax expense for the reported periods has been primarily affected by (i) variations in our income before income taxes;

(ii) federal tax credits;

(iii) excess tax benefits associated with equity-based compensation transactions;

(iv) the realization of state net operating losses and credits;

(v) tax audit settlements;

(vi) adjustments to our accruals and deferred taxes;

(vii) the tax implications of divestitures and (viii) non-deductible transaction costs.

The comparability of our income tax expense for the reported periods has been primarily affected by (i) federal tax credits;

(ii) the tax implications of impairments;

(iii) an unfavorable increase in permanent differences between taxable income and accounting income associated with our treatment of landfill closure and post-closure costs;

(iv) variations in our income before income taxes;

(v) the realization of state net operating losses and credits;

(vi) excess tax benefits associated with equity‑based compensation transactions and (vii) tax audit settlements.

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For financial reporting purposes, income before income taxes by source for the year ended December 31 was as follows (in millions):

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Investments Qualifying for Federal Tax Credits — We have significant financial interests in entities established to invest in and manage low-income housing properties.

In February 2022, we acquired an additional noncontrolling interest in a limited liability company established to invest in and manage low-income housing properties.

In October 2023, we acquired an additional noncontrolling interest in a limited liability company established to invest in and manage low-income housing properties.

Total consideration for this investment is expected to be $ 260 million, comprised of a $ 183 million note payable, an initial cash payment of $ 20 million and $ 57 million of interest payments expected to be paid over the life of the investment.

At the time of the investment, we increased our investments in unconsolidated entities in our Consolidated Balance Sheet by $ 211 million, representing the principal balance of the note and the initial cash investment.

At the time of the investment, we increased our investments in unconsolidated entities in our Consolidated Balance Sheet by $ 203 million, representing the principal balance of the note and the initial cash payment.

We support the operations of these entities in exchange for a pro-rata share of the tax credits they generate.

The low-income housing investments qualify for federal tax credits that we expect to realize through 2035 under Section 42 or Section 45D of the Internal Revenue Code.

We also held a residual financial interest in an entity that owned a refined coal facility that qualified for federal tax credits under Section 45 of the Internal Revenue Code through 2019.

The entity sold the majority of its assets in the first quarter of 2020, which resulted in a $ 7 million non-cash impairment of our investment at that time.

We account for our investments in these entities using the equity method of accounting, recognizing our share of each entity’s results of operations and other reductions in the value of our investments in equity in net losses of unconsolidated entities within our Consolidated Statements of Operations.

During the years ended December 31, 2022, 2021 and 2020, we recognized net losses of $ 65 million, $ 51 million and $ 73 million (including the $ 7 million impairment of the refined coal facility noted above), respectively, and a reduction in our income tax expense of $ 99 million, $ 74 million and $ 87 million, respectively, due to tax credits realized from these investments as well as the tax benefits from the pre-tax losses realized.

During the years ended December 31, 2023, 2022 and 2021, we recognized net losses of $ 66 million, $ 65 million and $ 51 million, respectively, and a reduction in our income tax expense of $ 108 million, $ 99 million and $ 74 million, respectively, primarily due to federal tax credits realized from these investments as well as the tax benefits from the pre-tax losses realized.

In addition, during the years ended December 31, 2023, 2022 and 2021, we recognized interest expense of $ 15 million, $ 14 million and $ 9 million, respectively, associated with our investments in low-income housing properties.

See Note 18 for additional information related to these unconsolidated variable interest entities.

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Equity-Based Compensation — During 2022, 2021 and 2020, we recognized a reduction in our income tax expense of $ 17 million, $ 18 million and $ 27 million, respectively, for excess tax benefits related to the vesting or exercise of equity-based compensation awards.

Tax Implications of Impairments — The non-cash impairment charges recognized during 2023 are not expected to be deductible for tax purposes.

The impact of these non-deductible charges and the resulting difference between book and taxable income is an increase in income tax expense of $ 50 million.

The non-cash impairment charges recognized during 2022 and 2021 were deductible for tax purposes.

See Note 11 for more information related to our impairment charges.

Permanent Differences —During 2023, 2022 and 2021 we recognized additional income tax expense of $ 34 million, $ 14 million and $ 2 million, respectively, related to permanent differences between taxable income and accounting income.

This increase is largely due to an increase in taxable interest income associated with the Company’s election to deduct landfill closure and post-closure costs for income tax purposes when incurred and accrued.

The increase in taxable interest income is due to the increase in the applicable federal rate published by the IRS.

State Net Operating Losses and Credits — During 2023, 2022 and 2021, we recognized state net operating losses and credits resulting in a reduction in our income tax expense of $ 20 million, $ 8 million and $ 15 million, respectively.

Equity-Based Compensation — During 2023, 2022 and 2021, we recognized a reduction in our income tax expense of $ 14 million, $ 17 million and $ 18 million, respectively, for excess tax benefits related to the vesting or exercise of equity-based compensation awards.

Tax Audit Settlements — We file income tax returns in the U.S.

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We are currently under audit by various taxing authorities, as discussed below, and our audits are in various stages of completion.

During the reported periods, we settled various tax audits which resulted in a reduction in our income tax expense of $ 6 million, $ 13 million and $ 10 million for the years ended December 31, 2022, 2021 and 2020, respectively.

During the reported periods, we settled various tax audits which resulted in a reduction in our income

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tax expense of $ 5 million, $ 6 million and $ 13 million for the years ended December 31, 2023, 2022 and 2021, respectively.

We participate in the IRS’s Compliance Assurance Process, which means we work with the IRS throughout the year towards resolving any material issues prior to the filing of our annual tax return.

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The Company expects to seek a refund of the entire amount deposited with the IRS and litigate any denial of the claim for refund.

As of December 31, 2022, the IRS deposit, net of reserve for uncertain tax positions, is classified as a component of other long-term assets in the Company’s Consolidated Balance Sheet.

In addition, we are in the examination phase of an IRS audit for the 2022 tax year and expect the audit to be completed within the next 18 months.

As of December 31, 2023 and 2022, the IRS deposit, net of reserve for uncertain tax positions, was classified as a component of other long-term assets in the Company’s Consolidated Balance Sheets.

In addition, we are in the examination phase of IRS audits for the 2022 and 2023 tax years and expect the audits to be completed within the next 18 months.

We are also currently undergoing audits by various state and local jurisdictions for tax years that date back to 2014.

Adjustments to Accruals and Related Deferred Taxes — Adjustments to our accruals and related deferred taxes primarily due to the filing of our income tax returns, analysis of our deferred tax balances and uncertain tax positions, and changes in state and foreign laws resulted in an increase in our income tax expense of $ 1 million and $ 17 million for the years ended December 31, 2022 and 2021, respectively, and a reduction in our income tax expense of $ 3 million for the year ended December 31, 2020.

Tax Implications of Divestitures — During 2021, we recognized a pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non-strategic Canadian operations.

This gain was not taxable, which benefited our effective income tax rate for the year ended December 31, 2021.

Non-Deductible Transaction Costs — During 2020, we recognized the detrimental tax impact of $ 27 million of non-deductible transaction costs related to our acquisition of Advanced Disposal.

The tax rules require the capitalization of certain facilitative costs on the acquisition of stock of a company resulting in the applicable costs not being deductible for tax purposes.

Tax Legislation — The Inflation Reduction Act of 2022 (“IRA”) was signed into law by President Biden on August 16, 2022 and contains a number of tax-related provisions.

The provisions of the IRA related to alternative fuel tax credits secure approximately $ 55 million of annual pre-tax benefit (to be recorded as a reduction in our operating expense) from tax credits through 2024.

Additionally, we will incur an excise tax of 1% for future common stock repurchases, which will be reflected in the cost of purchasing the underlying shares as a component of treasury stock.

The IRA contains a number of additional provisions related to tax incentives for investments in renewable energy production, carbon capture, and other climate actions, as well as the overall measurement of corporate income taxes.

We are in the process of evaluating the IRA and identifying all potential impacts that may be applicable.

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Unremitted Earnings in Foreign Subsidiaries — In the third quarter of 2020, we modified our permanent reinvestment assertion and began providing additional income taxes for the undistributed current year earnings of our foreign subsidiaries.

No additional income taxes have been provided for any remaining undistributed foreign earnings prior to 2020 not subject to the one-time, mandatory transition tax, or any additional outside basis difference, as these amounts continue to be indefinitely reinvested in foreign operations.

Deferred Tax Assets (Liabilities)

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While we expect to realize the deferred tax assets, net of the valuation allowances, changes in estimates of future taxable income or in tax laws may alter this expectation.

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Liabilities for Uncertain Tax Positions

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Balance as of December 31

These liabilities are included as a component of other long-term liabilities or as an offset to other long-term assets in our Consolidated Balance Sheets because the Company does not anticipate that settlement of the liabilities will require

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payment of cash within the next 12 months.

As of December 31, 2023, we had $ 54 million of net unrecognized tax benefits that, if recognized in future periods, would impact our effective income tax rate.

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employees who are not subject to such collective bargaining agreements are generally eligible to participate in the plan following a 90-day waiting period after hire and may contribute as much as 50 % of their eligible annual compensation and 80 % of their annual incentive plan bonus, subject to annual contribution limitations established by the IRS.

Under the retirement savings plan, for non-union employees, we match 100 % of employee contributions on the first 3 % of their eligible annual compensation and 50 % of employee contributions on the next 3 % of their eligible annual compensation, resulting in a maximum match of 4.5 % of eligible annual compensation.

Under the 401(k) retirement savings plan, for non-union employees, we match 100 % of employee contributions on the first 3 % of their eligible annual compensation and 50 % of employee contributions on the next 3 % of their eligible annual compensation, resulting in a maximum match of 4.5 % of eligible annual compensation.

Non-union employees are automatically enrolled in the plan at a 3 % contribution rate upon eligibility.

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As of December 31, 2023, the combined benefit obligation of these pension plans was $ 119 million supported by $ 118 million of combined plan assets, resulting in an aggregate unfunded benefit obligation for these plans of $ 1 million.

As of December 31, 2021, the combined benefit obligation of these pension plans was $ 150 million supported by $ 150 million of combined plan assets.

As of December 31, 2022, the combined benefit obligation of these pension plans was $ 117 million supported by $ 113 million of combined plan assets, resulting in an aggregate unfunded benefit obligation for these plans of $ 4 million.

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In addition, WM Holdings and certain of its subsidiaries provided post-retirement health care and other benefits to eligible retirees.

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The unfunded benefit obligation for these plans was $ 7 million and $ 8 million as of December 31, 2023 and 2022, respectively.

Our accrued benefit liabilities for our defined benefit pension and other post-retirement plans are included as components of accrued liabilities and long-term other liabilities in our Consolidated Balance Sheets.

Our assets and accrued benefit liabilities for our defined benefit pension and other post-retirement plans are included as components of long-term other assets, accrued liabilities and long-term other liabilities in our Consolidated Balance Sheets.

Multiemployer Defined Benefit Pension Plans — We are a participating employer in a number of trustee-managed multiemployer defined benefit pension plans (“Multiemployer Pension Plans”) for employees who are covered by collective bargaining agreements.

The risks of participating in these Multiemployer Pension Plans are different from single-employer plans in that (i) assets contributed to the Multiemployer Pension Plan by one employer may be used to provide benefits to employees or former employees of other participating employers;

(ii) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be required to be assumed by the remaining participating employers and (iii) if we choose to stop participating in any of our Multiemployer Pension Plans, we may be required to

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pay those plans a withdrawal amount based on the underfunded status of the plan.

The following table outlines our participation in Multiemployer Pension Plans considered to be individually significant (dollars in millions):

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Contributing employers, however, may eliminate the surcharge by entering into a collective bargaining agreement that meets the requirements of the applicable FIP or RP.

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(d) Of the Multiemployer Pension Plans considered to be individually significant, the Company was listed in the Form 5500 of the Suburban Teamsters of Northern Illinois Pension Plan as providing more than 5 % of the total contributions for plan years ending December 31, 2023 and 2022.

Total contributions to Multiemployer Pension Plans exclude contributions related to withdrawal liabilities.

Total contributions to Multiemployer Pension Plans exclude contributions related to withdrawal liabilities, if any.

Our portion of the projected benefit obligation, plan assets and unfunded liability for the Multiemployer Pension Plans is not material to our financial position.

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Further, business events, such as the discontinuation or nonrenewal of a customer contract, the decertification of a union, or relocation, reduction or discontinuance of certain operations, which result in the decline of Company contributions to a Multiemployer Pension Plan could trigger a partial or complete withdrawal.

In the event of a withdrawal, we may incur expenses associated with

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our obligations for unfunded vested benefits at the time of the withdrawal.

In the event of a withdrawal, we may incur expenses associated with our obligations for unfunded vested benefits at the time of the withdrawal.

Refer to Note 10 for additional information related to our obligations to Multiemployer Pension Plans.

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“General liability” refers to the self-insured portion of specific third-party claims made against us that may be covered under our commercial general liability insurance policy.

For our self-insured portions, the exposure for unpaid claims and associated expenses, including incurred but not reported losses, is based on an actuarial valuation or internal estimates.

The accruals for these liabilities could be revised if future occurrences or loss development significantly differ from such valuations and estimates.

We use a wholly-owned insurance captive to insure the deductibles for our general liability, automobile liability and workers’ compensation claims programs.

Our receivable balance

For our self-insured portions, the exposure for unpaid claims and associated expenses, including incurred but not reported losses, is based on an actuarial

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associated with insurance claims was $ 142 million and $ 155 million as of December 31, 2022 and 2021 respectively.

valuation or internal estimates.

The accruals for these liabilities could be revised if future occurrences or loss development significantly differ from such valuations and estimates.

We use a wholly-owned insurance captive to insure the deductibles for our general liability, automobile liability and workers’ compensation claims programs.

Our receivable balance associated with insurance claims was $ 127 million and $ 142 million as of December 31, 2023 and 2022 respectively.

The changes to our insurance reserves for the year ended December 31 are summarized below (in millions):

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We generally fulfill our minimum contractual obligations by disposing of volumes collected in the ordinary course of business at these disposal facilities.

● Other — We are party to certain multi-year service agreements expiring at various dates through 2030 requiring minimum annual payments.

As of December 31, 2022, our estimated minimum obligations associated with unconditional purchase obligations, which are not recognized in our Consolidated Balance Sheets, were $ 192 million in 2023, $ 158 million in 2024, $ 114 million in 2025, $ 101 million in 2026, $ 34 million in 2027 and $ 369 million thereafter.

● Other — We are party to certain multi-year service agreements, including various contracts to support our WM Renewable Energy segment, such as interconnection agreements, expiring at various dates through 2044 requiring minimum annual payments.

As of December 31, 2023, our estimated minimum obligations associated with unconditional purchase obligations were $ 173 million in 2024, $ 164 million in 2025, $ 133 million in 2026, $ 51 million in 2027, $ 44 million in 2028 and $ 470 million thereafter.

We may also establish unconditional purchase obligations in conjunction with acquisitions or divestitures.

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We currently expect the products and services provided by these agreements to continue to meet the needs of our ongoing operations.

Therefore, we do not expect these established arrangements to materially impact our future financial position, results of operations or cash flows.

Therefore, we do not expect these established arrangements to materially impact our future financial condition, results of operations or cash flows.

Other Commitments

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Royalty agreements that are non-cancelable and require fixed or minimum payments are included in our financing leases and other debt obligations in our Consolidated Balance Sheets as disclosed in Note 6.

Guarantees — We have entered into the following guarantee agreements associated with our operations:

● As of December 31, 2022, WM Holdings has fully and unconditionally guaranteed all of WMI’s senior indebtedness, including its senior notes which mature through 2050, $ 3.5 billion revolving credit facility, Term

Additionally, our Collection and Disposal and Corporate and Other businesses earn royalties from our WM Renewable Energy segment related to the

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Loan and certain letter of credit lines.

transfer of landfill gas to our WM Renewable Energy segment from our active and closed landfills.

All royalties between our WM Renewable Energy segment and Collection and Disposal and Corporate and Other businesses are eliminated in consolidation.

Guarantees — We have entered into the following guarantee agreements associated with our operations:

● As of December 31, 2023, WM Holdings has fully and unconditionally guaranteed all of WMI’s senior indebtedness, including its senior notes which mature through 2050, $3.5 billion revolving credit facility and certain letter of credit lines.

WMI has fully and unconditionally guaranteed the senior indebtedness of WM Holdings, which matures in 2026.

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Any liability associated with the triggering of the home value guarantee has been reflected in our Consolidated Balance Sheets.

We do not believe that the remaining contingent obligations will have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

We do not believe that the remaining contingent obligations will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

● We have indemnified the purchasers of businesses or divested assets for the occurrence of specified events under certain of our divestiture agreements.

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Under current laws and regulations, we may have liabilities for environmental damage caused by our operations, or for damage caused by conditions that existed before we acquired a site.

In addition to remediation activity required by state or local authorities, such liabilities include PRP investigations.

The costs associated with these liabilities can include settlements, certain legal and consultant fees, as well as incremental internal and external costs directly associated with site investigation and clean-up.

As of December 31, 2022, we have been notified by the government that we are a PRP in connection with 73 locations listed on the Environmental Protection Agency’s (“EPA’s”) Superfund National Priorities List (“NPL”).

Of the 73 sites at which claims have been made against us, 14 are sites we own.

Each of the NPL sites we own was initially developed by

In addition to remediation activity

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

others as a landfill disposal facility.

required by state or local authorities, such liabilities include PRP investigations.

As of December 31, 2023, we have been notified by the government that we are a PRP in connection with 73 locations listed on EPA Superfund National Priorities List (“NPL”).

Of the 73 sites at which claims have been made against us, 14 are sites we own.

Each of the NPL sites we own was initially developed by others as a landfill disposal facility.

At each of these facilities, we are working in conjunction with the government to characterize or remediate identified site problems, and we have either agreed with other legally liable parties on an arrangement for sharing the costs of remediation or are working toward a cost-sharing agreement.

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At other sites, where no remedy has been selected or the liable parties have been unable to agree on an appropriate allocation, our future costs are uncertain.

On October 11, 2017, the EPA issued its Record of Decision (“ROD”) with respect to the previously proposed remediation plan for the San Jacinto River Waste Pits Site in Harris County, Texas.

McGinnes Industrial Maintenance Corporation (“MIMC”), a subsidiary of Waste Management of Texas, Inc., operated some of the waste pits from 1965 to 1966 and has been named as a site PRP.

In 1998, WMI acquired the stock of the parent entity of MIMC.

MIMC has been working with the EPA and other named PRPs as the process of addressing the site proceeds.

On April 9, 2018, MIMC and International Paper Company entered into an Administrative Order on Consent agreement with the EPA to develop a remedial design for the EPA’s proposed remedy for the site, and we recorded a liability for MIMC’s estimated potential share of the EPA’s proposed remedy and related costs, although allocation of responsibility among the PRPs for the proposed remedy has not been established.

MIMC and International Paper Company have continued to work on a remedial design to support the EPA’s proposed remedy;

however, design investigations indicate that fundamental changes are required to the proposed remedy and MIMC maintains its prior position that the remedy set forth in the ROD is not the best solution to protect the environment and public health.

Due to further increases in the estimated cost of the remedy set forth in the ROD, we recorded an additional liability of $ 17 million as of March 31, 2022 for MIMC’s estimated potential share of such costs.

As of December 31, 2022 and 2021, the recorded liability for MIMC’s estimated potential share of the EPA’s proposed remedy was $ 68 million and $ 53 million, respectively.

MIMC’s ultimate liability could be materially different from current estimates and MIMC will continue to engage the EPA regarding its proposed remedy.

In 2018, both of McGinnes Industrial Maintenance Corporation (“MIMC”), a subsidiary of Waste Management of Texas, Inc., and International Paper Company (“IPC”) entered into an Administrative Order on Consent with the EPA as PRPs to develop a remedial design for the San Jacinto River Waste Pits Superfund Site in Harris County, Texas.

We recorded a liability for MIMC’s estimated potential share of the EPA’s proposed remedy and related costs, although allocation of responsibility among the PRPs for the proposed remedy has not been established.

MIMC and IPC have continued to work on a remedial design to support the EPA’s proposed remedy;

however, in the first quarter of 2024, the EPA publicly issued a letter alleging that the remedial design has serious deficiencies and providing MIMC and IPC time to submit a remedy plan.

Due to increases in the estimated costs of the remedy, we recorded an additional $ 17 million liability for MIMC’s estimated potential share of such costs in 2023.

The total recorded liability as of December 31, 2023 and 2022 was $ 85 million and $ 68 million, respectively.

MIMC’s ultimate liability could be materially different from current estimates, including potential increases resulting from MIMC’s continued engagement with the EPA regarding a final remedial design for the site.

Refer to Notes 2 and 11 for additional information regarding the measurement of certain environmental liabilities.

Item 103 of the SEC’s Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings, or such proceedings are known to be contemplated, unless we reasonably believe that the matter will result in no monetary sanctions, or in monetary sanctions, exclusive of interest and costs, below a stated threshold.

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From time to time, we are also named as defendants in personal injury and property damage lawsuits, including purported class actions, on the basis of having owned, operated or transported waste to a disposal facility that is alleged to have contaminated the environment or, in certain cases, on the basis of having conducted environmental remediation activities at sites.

Some of the lawsuits may seek to have us pay the costs of monitoring of allegedly affected sites and health care examinations of allegedly affected persons for a substantial period of time even where no actual damage is proven.

While we believe we have meritorious defenses to these lawsuits, the ultimate resolution is often substantially uncertain due to the difficulty of determining the cause, extent and impact of alleged contamination (which may have occurred over a long period of time), the potential for successive groups of complainants to emerge, the diversity of the individual plaintiffs’ circumstances, and the potential contribution or indemnification obligations of co-defendants or other

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

third parties, among other factors.

Additionally, we often enter into agreements with landowners imposing obligations on us to meet certain regulatory or contractual conditions upon site closure or upon termination of the agreements.

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A lead plaintiff has been appointed and an amended complaint was filed in January 2023.

The amended complaint seeks damages on behalf of a putative class of persons who purchased our SMR Notes (as defined and discussed in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Loss on Early Extinguishment of Debt, Net ), asserting claims under the Securities Exchange Act based on alleged misrepresentations and omissions concerning the time for completion of our acquisition of Advanced Disposal.

We will vigorously defend against this pending suit.

The amended complaint seeks damages on behalf of a putative class of secondary market purchasers of our senior notes with a special mandatory redemption feature issued in May 2019, asserting claims under the Securities Exchange Act based on alleged misrepresentations and omissions concerning the time for completion of our acquisition of Advanced Disposal.

Our motion to dismiss is pending and we will vigorously defend against this pending suit.

We believe any potential recovery by the plaintiffs, in excess of applicable deductibles, will be covered by insurance, and we do not believe that the eventual outcome of this suit will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

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A complete or partial withdrawal from a Multiemployer Pension Plan may also occur if employees covered by a collective bargaining agreement vote to decertify a union from continuing to represent them.

Any other circumstance resulting in a decline in Company contributions to a Multiemployer Pension Plan through a reduction in the labor force, whether through attrition over time or through a business event (such as the discontinuation or nonrenewal of a customer contract, the decertification of a union, or relocation, reduction or discontinuance of certain operations) may also trigger a complete or partial withdrawal from one or more of these pension plans.

We do not believe that any future liability relating to our past or current participation in, or withdrawals from, the Multiemployer Pension Plans to which we contribute will have a material adverse effect on our business, financial

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condition or liquidity.

of a union, or relocation, reduction or discontinuance of certain operations) may also trigger a complete or partial withdrawal from one or more of these pension plans.

However, liability for future withdrawals could have a material adverse effect on our results of operations or cash flows for a particular reporting period, depending on the number of employees withdrawn and the financial condition of the Multiemployer Pension Plan(s) at the time of such withdrawal(s).

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The Company expects to seek a refund of the entire amount deposited with the IRS and litigate any denial of the claim for refund.

As of December 31, 2022, the IRS deposit, net of reserve for uncertain tax positions, is classified as a component of other long-term assets in the Company’s Consolidated Balance Sheet.

As of December 31, 2023 and 2022, the IRS deposit, net of reserve for uncertain tax positions, was classified as a component of other long-term assets in the Company’s Consolidated Balance Sheets.

Asset Impairments and Unusual Items

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Asset impairments

For the year ended December 31, 2022, we recognized $ 62 million of net charges consisting of (i) $ 50 million of asset impairment charges primarily related to management’s decision to close two landfills within our East Tier segment and (ii) a $ 17 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site, as discussed in Note 10.

These losses were partially offset by a $ 5 million gain from the divestiture of a solid waste business in our West Tier segment.

For the year ended December 31, 2021, we recognized net gains of $ 16 million primarily consisting of (i) a $ 35 million pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non-strategic Canadian operations in our East Tier segment and (ii) an $ 8 million gain from divestitures of certain ancillary operations in our Other segment.

These gains were partially offset by (i) a $ 20 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment and (ii) $ 8 million of asset impairment charges primarily related to our WM Renewable Energy business within our Other segment.

For the year ended December 31, 2020, we recognized $ 35 million of net charges primarily related to (i) a $ 33 million net gain associated with net asset divestitures executed to address requirements of the U.S.

Department of Justice in connection with our acquisition of Advanced Disposal, primarily within our West Tier segment;

(ii) $ 41 million of non-cash impairment charges primarily related to two landfills and an oil field waste injection facility in our West Tier segment;

(iii) a $ 20 million non-cash impairment charge in our East Tier segment due to management’s decision to close a landfill once its constructed airspace is filled and abandon any remaining permitted airspace and (iv) $ 7 million of net charges primarily related to non-cash impairments of certain assets within our WM Renewable Energy business in our Other segment.

During the year ended December 31, 2023, we recognized $ 243 million of net charges primarily consisting of (i) a $ 168 million goodwill impairment charge within our Recycling Processing and Sales segment related to a business engaged in accelerating film and plastic wrap recycling capabilities, with $ 22 million attributable to noncontrolling interests.

This charge was partially offset by the recognition of $ 46 million of income related to the reversal of a liability for contingent consideration associated with our investment in such business;

(ii) $ 107 million of impairment charges within Corporate and Other for certain investments in waste diversion technology businesses and (iii) a $ 17 million charge within Corporate and Other to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site.

Refer to Notes 5 and 10 for further information.

During the year ended December 31, 2022, we recognized $ 62 million of net charges consisting of (i) $ 50 million of asset impairment charges primarily related to management’s decision to close two landfills within our East Tier and (ii) a $ 17 million charge pertaining to reserves for loss contingencies within Corporate and Other to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site, as discussed in Note 10.

These losses were partially offset by a $ 5 million gain from the divestiture of a collection and disposal business in our West Tier.

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During the year ended December 31, 2021, we recognized net gains of $ 16 million primarily consisting of (i) a $ 35 million pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non-strategic Canadian operations in our East Tier and (ii) an $ 8 million gain from divestitures of certain ancillary operations within our Collection and Disposal businesses.

These gains were partially offset by (i) a $ 20 million charge pertaining to reserves for loss contingencies within Corporate and Other and (ii) $ 8 million of asset impairment charges primarily related to our WM Renewable Energy segment.

See Note 2 for additional information related to the accounting policy and analysis involved in identifying and calculating impairments.

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Equity in Net Losses of Unconsolidated Entities

For the year ended December 31, 2020, we recorded a non-cash impairment charge of $ 7 million related to an investment in a refined coal facility which is discussed further in Note 8.

The fair value of our investment was not readily determinable;

thus, we determined the fair value using management assumptions pertaining to investment value (Level 3 inputs).

The remaining losses for the years ended December 31, 2022, 2021 and 2020 were primarily related to our noncontrolling interests in entities established to invest in and manage low-income housing properties.

The losses for the reported years were primarily related to our noncontrolling interests in entities established to invest in and manage low-income housing properties.

We generate tax benefits, including tax credits, from the losses incurred from these investments.

The losses are more than offset by the tax benefits generated by these investments as further discussed in Note 8.

Refer to Notes 8 and 18 for additional information related to these investments.

Refer to (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net above for more information on the impairment of an equity method investment.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accumulated Other Comprehensive Income (Loss)

The changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, which is included as a component of WMI stockholders’ equity, are as follows (in millions, with amounts in parentheses representing decreases to accumulated other comprehensive income):

Adjustments(a)

Securities(a)

Adjustments(b)

Balance, December 31, 2020

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Balance, December 31, 2023

(a) As a result of the divestiture of certain non-strategic Canadian operations in the third quarter of 2021, we reclassified $ 35 million of cumulative foreign currency translation adjustments from accumulated other comprehensive income

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to (gain) loss from divestitures, asset impairments and unusual items, net within our Consolidated Statement of Operations .

(a) In 2023, we recognized a $ 23 million unrealized loss, net of a deferred tax benefit of $ 8 million, associated with our investment in redeemable preferred stock due to the estimated fair value being less than the remaining carrying value.

(b) As a result of the divestiture of certain non-strategic Canadian operations in 2021, we reclassified $ 35 million of cumulative foreign currency translation adjustments from accumulated other comprehensive income to (gain) loss from divestitures, asset impairments and unusual items, net within our Consolidated Statement of Operations .

Capital Stock, Dividends and Common Stock Repurchase Program

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As of December 31, 2023, we had 401.5 million shares of common stock issued and outstanding.

The Board of Directors is authorized to issue preferred stock in series, and with respect to each series, to fix its designation, relative rights (including voting, dividend, conversion, sinking fund, and redemption rights), preferences (including dividends and liquidation) and limitations.

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We have 10 million shares of authorized preferred stock, $ 0.01 par value, none of which is currently outstanding.

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The Company repurchases shares of its common stock as part of capital allocation programs authorized by our Board of Directors.

Share repurchases are a part of our long-term strategy and incorporated into our overall capital allocation plan to enhance our Company’s performance, in conjunction with our other uses of capital, and to return value to stockholders in a tax-efficient manner.

Share repurchases during the reported periods were completed through accelerated share repurchase (“ASR”) agreements and, to a lesser extent, open market transactions.

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Total repurchases (in millions)

(a) We executed and completed four ASR agreements during 2022 to repurchase $ 1.417 billion of our common stock and received 8.8 million shares in connection with these ASR agreements.

(a) We executed and completed three ASR agreements during 2023 to repurchase $ 950 million of our common stock and received 6.0 million shares in connection with these ASR agreements.

Additionally, in October 2023, we executed an ASR agreement to repurchase $ 300 million of our common stock.

At the beginning of the repurchase period, we delivered $ 300 million in cash and received 1.5 million shares based on a stock price of $ 161.38 .

The ASR agreement completed in February 2024, at which time we received 0.2 million additional shares based on a final weighted average price of $ 175.29 .

We also repurchased an additional 0.3 million shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934 (“Exchange Act”) for $ 52 million, inclusive of per-share commissions.

Shares repurchased in 2022 include 0.4 million shares of our common stock for $ 70 million pursuant to our December 2021 ASR agreement that completed in January 2022.

(b) We executed and completed three ASR agreements during 2021 to repurchase $ 1.0 billion of our common stock and received 7.0 million shares in connection with these ASR agreements.

Additionally, in December 2021, we executed

The IRA, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022.

We reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased.

The above discussion of our common stock repurchases in 2023 is excluding the 1% excise tax.

(b) We executed and completed four ASR agreements during 2022 to repurchase $ 1.417 billion of our common stock and received 8.8 million shares in connection with these ASR agreements.

We also repurchased an additional 0.6 million shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the

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an ASR agreement to repurchase $ 350 million of our common stock.

Exchange Act for $ 83 million, inclusive of per-share commissions.

Shares repurchased in 2022 include 0.4 million shares of our common stock for $ 70 million pursuant to our December 2021 ASR agreement that completed in January 2022.

(c) We executed and completed three ASR agreements during 2021 to repurchase $ 1.0 billion of our common stock and received 7.0 million shares in connection with these ASR agreements.

Additionally, in December 2021, we executed an ASR agreement to repurchase $ 350 million of our common stock.

At the beginning of the repurchase period, we delivered $ 350 million in cash and received 1.7 million shares based on a stock price of $ 160.67 .

The ASR agreement completed in January 2022, at which time we received 0.4 million additional shares based on a final weighted average price of $ 160.33 .

(c) During 2020, we executed and completed an ASR agreement to repurchase $ 313 million of our common stock and received 2.8 million shares in connection with this ASR agreement.

We also repurchased an additional 0.9 million shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act for $ 89 million, inclusive of per-share commissions.

We announced in December 2022 that the Board of Directors has authorized up to $ 1.5 billion in future share repurchases.

This new authorization replaces our prior $ 1.5 billion authorization that was fully utilized in 2022.

Any future share repurchases will be made at the discretion of management and will depend on factors similar to those considered by the Board of Directors in making dividend declarations, including our net earnings, financial condition and cash required for future business plans, growth and acquisitions.

We announced in December 2023 that the Board of Directors has authorized up to $ 1.5 billion in future share repurchases, excluding the 1% excise tax.

This new authorization supersedes and replaces remaining authority under the prior Board of Directors’ authorization for share repurchases announced in December 2022.

The amount of future share repurchases executed under our Board of Directors’ authorization is determined in management’s discretion, based on various factors, including our net earnings, financial condition and cash required for future business plans, growth and acquisitions.

Equity-Based Compensation

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January through June and July through December.

At the end of each offering period, enrolled employees purchase shares of our common stock at a price equal to 85 % of the lesser of the market value of the stock on the first and last day of such offering period.

At the end of each offering period, enrolled employees have purchased shares of our common stock at a price equal to 85 % of the lesser of the market value of the stock on the first and last day of the applicable offering period.

The ESPP was recently amended, and beginning in 2024, enrolled employees will purchase shares of our common stock at a price equal to 85 % of the market value on the last day of the applicable offering period.

The purchases are made at the end of an offering period with funds accumulated through payroll deductions over the course of the offering period.

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In May 2023, our stockholders approved our 2023 Stock Incentive Plan (the “2023 Plan”) to replace our 2014 Stock Incentive Plan (the “2014 Plan”).

The 2014 Plan authorized 23.8 million shares of our common stock for issuance pursuant to the 2014 Plan, plus the approximately 1.1 million shares that then remained available for issuance under the 2009 Plan, and any shares subject to outstanding awards under both incentive plans that are subsequently cancelled, forfeited, terminate, expire or lapse.

In May 2020, the Company’s Board of Directors amended the 2014 Plan to provide that the number of future shares surrendered in payment of the exercise or purchase price of an award, and the number of future shares used to satisfy the withholding obligations, shall no longer be credited back to the total number of shares available for issuance under the 2014 Plan.

Upon approval of the 2023 Plan, no further awards could be granted under the 2014 Plan.

Pursuant to the terms of the 2023 Plan, approximately 15.2 million shares of our common stock that were previously available for issuance pursuant to future grants of awards under the 2014 Plan are now available for issuance under the 2023 Plan, in addition to any shares of our common stock that were subject to outstanding awards under the 2014 Plan that subsequently cease to be subject to such awards as a result of the forfeiture, cancellation or termination.

We did not request that our stockholders approve any shares in addition to the shares that roll over from the 2014 Plan for issuance pursuant to the 2023 Plan.

As of December 31, 2023, approximately 14.3 million shares were available for future grants under the 2023 Plan.

All of our equity-based compensation awards described herein have been made pursuant to either our 2009 Plan or our 2014 Plan, collectively referred to as the “Incentive Plans.” We currently utilize treasury shares to meet the needs of our equity-based compensation programs.

Pursuant to the Incentive Plans, we have the ability to issue stock options, stock appreciation rights and stock awards, including restricted stock, restricted stock units (“RSUs”) and performance share units (“PSUs”).

The terms and conditions

Our equity-based compensation awards described herein have been made pursuant to our 2023 Plan or our 2014 Plan, and certain employees hold vested unexercised stock options granted under our 2009 Stock Incentive

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of equity awards granted under the Incentive Plans are determined by the Management Development and Compensation Committee of our Board of Directors.

The 2022 annual incentive plan awards granted to the Company’s senior leadership team, which generally includes the Company’s executive officers, included a combination of PSUs and stock options.

Additionally, several members of the Company’s senior leadership team received a grant of RSUs in 2022 in special recognition of leadership and contributions critical to the acquisition of Advanced Disposal and the subsequent integration and synergy generation.

Awards granted to other eligible employees under the 2014 Plan included a combination of PSUs, RSUs and stock options in 2022.

The Company also periodically grants RSUs to employees working on key initiatives, in connection with new hires and promotions and to field-based managers.

Plan (together with the 2023 Plan and the 2014 Plan, the “Incentive Plans”).

We currently utilize treasury shares to meet the needs of our equity-based compensation programs.

Pursuant to the 2023 Plan, we can issue cash awards, stock options, stock appreciation rights, phantom stock and stock awards, including restricted stock, restricted stock units (“RSUs”) and performance share units (“PSUs”).

The terms and conditions of equity awards granted under the Incentive Plans are determined by the Management Development and Compensation Committee of our Board of Directors.

The 2023 annual stock incentive plan awards granted to the Company’s senior leadership team, which generally includes the Company’s executive officers, included a combination of PSUs and stock options.

Awards granted to other eligible employees under the Incentive Plans included a combination of PSUs, RSUs and stock options in 2023.

The Company also periodically grants RSUs to employees working on key initiatives, in connection with new hires and promotions and to field and corporate managers.

Restricted Stock Units — A summary of our RSUs is presented in the table below (units in thousands):

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Compensation expense associated with RSUs is measured based on the grant-date fair value of our common stock and is recognized on a straight-line basis over the required employment period.

Beginning in 2021, the terms of the award agreements for new grants of RSUs were updated to provide for accelerated vesting following retirement as if the employee had remained employed until the end of the vesting period.

Accordingly, compensation expense for RSUs granted to retirement eligible employees is recognized over the longer of (i) the period between grant date and the date that the recipient becomes retirement-eligible or (ii) the defined service requirement of the award.

RSUs generally continue to vest following a qualifying retirement as if the employee had remained employed until the end of the vesting period, and compensation expense for RSUs granted to retirement eligible employees is recognized over the longer of (i) the period between grant date and the date that the recipient becomes retirement-eligible or (ii) the defined service requirement of the award.

Compensation expense is only recognized for those awards that we expect to vest, which we estimate based upon an assessment of expected forfeitures.

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Unvested as of December 31, 2023

The determination of achievement of performance results and corresponding vesting of PSUs for the three-year performance period ended December 31, 2022 was performed by the Management Development and Compensation Committee of our Board of Directors in January 2023.

The determination of achievement of performance results and corresponding vesting of PSUs for the three-year performance period ended December 31, 2023 was performed by the Management Development and Compensation Committee of our Board of Directors in February 2024.

Accordingly, vesting information for such awards is not included in the table above as of December 31, 2023.

The “vested” PSUs are for the three-year performance period ended December 31, 2021, as achievement of performance results and corresponding vesting was determined in February 2022.

The performance of the Company’s common stock for purposes of the TSR PSUs exceeded target performance criteria, and the Company’s financial results, as measured for purposes of the Cash Flow PSUs, exceeded the maximum performance criteria.

The “vested” PSUs are for the three-year performance period ended December 31, 2022, as achievement of performance results and corresponding vesting was determined in January 2023.

The performance of the Company’s common stock for purposes of the TSR PSUs exceeded maximum performance criteria, and the Company’s financial results, as measured for purposes of the Cash Flow PSUs, exceeded target performance criteria.

Accordingly, recipients of the PSU awards received a payout of 200 % of the vested TSR PSUs and 150.21 % of the vested Cash Flow PSUs.

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PSUs are generally subject to pro-rata vesting upon an employee’s involuntary termination other than for cause and are subject to forfeiture in the event of voluntary or for-cause termination.

The terms of the award agreements for outstanding PSUs provide for continued vesting following retirement as if the employee had remained employed until the end of the performance period, and compensation expense for PSUs granted to retirement-eligible employees is accelerated over the period that the recipient becomes retirement-eligible plus a defined service requirement.

PSUs generally continue to vest following a qualifying retirement as if the employee had remained employed until the end of the performance period, and compensation expense for PSUs granted to retirement-eligible employees is accelerated over the period that the recipient becomes retirement-eligible plus a defined service requirement.

Compensation expense associated with our Cash Flow PSUs is based on the grant-date fair value of our common stock.

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Compensation expense is recognized for all TSR PSUs whether or not the market conditions are achieved less expected forfeitures.

Deferred Units — Certain employees can elect to defer some or all of the vested RSU or PSU awards until a specified date or dates they choose.

Deferred Units — Certain employees can elect to defer some or all of the vested RSU or PSU awards for payout six months after the employee leaves the Company.

Deferred units are not invested, nor do they earn interest, but deferred amounts do receive dividend equivalents paid in cash during deferral at the same time and at the same rate as dividends on the Company’s common stock.

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As of December 31, 2023, we had approximately 182,000 vested deferred units outstanding.

Stock Options — Stock option awards vest ratably in three annual increments, beginning on the first anniversary of the date of grant.

The exercise price of the options is the average of the high and low market value of our common stock

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock Options — Stock options granted prior to 2021 vest in 25 % increments on the first two anniversaries of the date of grant with the remaining 50 % vesting on the third anniversary.

Beginning in 2021, stock options granted vest ratably in three annual increments, beginning on the first anniversary of the date of grant.

The exercise price of the options is the average of the high and low market value of our common stock on the date of grant, and the options have a term of 10 years .

on the date of grant, and the options have a term of 10 years .

A summary of our stock options is presented in the table below (options in thousands):

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Exercisable as of December 31, 2023 (c)

(a) Includes approximately 141,000 stock options exercised pursuant to Rule 10b5-1 trading plans that provided for net share settlement, resulting in the Company withholding approximately 112,000 shares of our common stock to cover the associated stock option exercise price and taxes.

(a) Includes approximately 83,000 stock options exercised pursuant to a written trading plan that provided for net share settlement, resulting in the Company withholding approximately 70,000 shares of our common stock to cover the associated stock option exercise price and taxes.

(b) Stock options outstanding as of December 31, 2023 have a weighted average remaining contractual term of 6.0 years and an aggregate intrinsic value of $ 185 million based on the market value of our common stock on December 31, 2023.

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$ 41.37 -$ 150.12

$ 36.88 -$ 145.67

All unvested stock options shall become exercisable upon the award recipient’s death or disability.

In the event of a recipient’s retirement, stock options shall continue to vest pursuant to the original schedule set forth in the award agreement.

In the event of a recipient’s qualifying retirement, stock options shall continue to vest pursuant to the original schedule set forth in the award agreement.

If the recipient is terminated by the Company without cause or voluntarily resigns, the recipient shall be entitled to exercise all stock options outstanding and exercisable within a specified time frame after such termination.

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The weighted average grant-date fair value of stock options granted during the years ended December 31, 2023, 2022 and 2021 was $ 32.82 , $ 26.44 and $ 17.25 , respectively.

The fair value of stock options at the date of grant is amortized to expense over the vesting period less expected forfeitures, except

The fair value of stock options at the date of grant is amortized to expense over the vesting period less expected forfeitures, except for stock options granted to retirement-eligible employees, for which expense is accelerated over the period that the

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for stock options granted to retirement-eligible employees, for which expense is accelerated over the period that the recipient becomes retirement-eligible.

recipient becomes retirement-eligible.

The following table presents the weighted average assumptions used to value employee stock options granted during the year ended December 31 under the Black-Scholes valuation model:

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Non-Employee Director Plan

Our non-employee directors currently receive annual grants of shares of our common stock, generally payable in two equal installments, under the 2014 Plan described above.

Our non-employee directors receive annual grants of shares of our common stock, generally payable in two equal installments, under the Incentive Plans described above.

Each non-employee director is required to hold all shares issued pursuant to a Company stock award, after the sale of shares necessary to cover applicable taxes, until retirement or other termination of service as a director of the Company.

Earnings Per Share

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Redeemable preferred stock

See Note 11 for information related to our nonrecurring fair value measurements and the impact of impairments.

See Note 17 for information related to the nonrecurring fair value measurement of assets and liabilities acquired in connection with our acquisitions.

Cash Equivalents and Money Market Funds

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Treasury securities, U.S.

agency securities, municipal securities and mortgage- and asset-backed securities, which generally mature over the next nine years .

agency securities, municipal securities and mortgage- and asset-backed securities, which generally mature over the next ten years .

We measure the fair value of these securities using quoted prices for identical or similar assets in inactive markets.

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Redeemable Preferred Stock

Redeemable preferred stock is related to a noncontrolling investment in an unconsolidated entity and is included in investments in unconsolidated entities in our Consolidated Balance Sheets.

The fair value of our investment has been measured based on third-party investors’ recent or pending transactions in these securities, which are considered the best evidence of fair value.

When this evidence is not available, we use other valuation techniques as appropriate and available.

These valuation methodologies may include transactions in similar instruments, discounted cash flow techniques, third-party appraisals or industry multiples and public company comparable transactions.

Redeemable preferred stock related to a noncontrolling investment in an unconsolidated entity and was included in investments in unconsolidated entities in our Consolidated Balance Sheets.

The fair value of our investment was measured based on third-party investors’ recent or pending transactions in these securities, which were considered the best evidence of fair value.

When this evidence was not available, we used other valuation techniques as appropriate and available.

These valuation methodologies may have included transactions in similar instruments, discounted cash flow techniques, third-party appraisals or industry multiples and public company comparable transactions.

While we continue to hold this investment, in 2023, we determined that the carrying value of the investment was fully impaired.

This write-off resulted in (i) a $ 25 million impairment charge to the income statement and (ii) the recognition of an additional $ 23 million unrealized loss, net of a deferred tax benefit of $ 8 million, within Accumulated Other Comprehensive Income (Loss).

Refer to Notes 11 and 12 for additional information.

Fair Value of Debt

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The estimated fair value of our debt was approximately $ 15.6 billion and $ 13.8 billion as of December 31, 2023 and 2022, respectively.

The decrease in the fair value of debt is primarily related to increases in current market rates of our senior notes, the impacts of which were substantially offset by net borrowings of $ 1.4 billion during 2022.

Although we have determined the estimated fair value amounts using available market information and commonly accepted valuation methodologies, considerable judgment is required in interpreting market data to develop the estimates of fair value.

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2023 Acquisitions

During the year ended December 31, 2023, we acquired 12 businesses, primarily related to our Collection and Disposal businesses.

Total consideration, net of cash acquired, for all acquisitions was $ 182 million, which included $ 157 million in net cash paid and $ 25 million in non-cash consideration, primarily related to purchase price holdbacks.

In addition, we paid $ 13 million of holdbacks, of which $ 6 million related to prior year acquisitions.

Total consideration for our 2023 acquisitions was primarily allocated to $ 49 million of property and equipment, $ 44 million of other intangible assets and $ 88 million of goodwill.

Other intangible assets included $ 34 million of customer relationships and $ 10 million of covenants not-to-compete.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The goodwill related to our 2023 acquisitions was primarily a result of expected synergies from combining the acquired businesses with our existing operations and substantially all was tax deductible.

2022 Acquisitions

During the year ended December 31, 2022, we acquired 13 businesses, including the acquisition of a controlling interest in a business intended to allow us to deliver new recycling capabilities for our customers and provide circular solutions for film and clear plastic wrap used commercially, such as plastic stretch wrap for pallets, furniture film, grocery bags and potentially shrink wrap around food and beverage containers.

Our other acquisitions in 2022 primarily related to our Solid Waste business.

Our other acquisitions in 2022 primarily related to our Collection and Disposal businesses.

Total consideration, net of cash acquired, for all acquisitions was $ 507 million, which included $ 372 million in net cash paid and $ 135 million in non-cash consideration, primarily related to purchase price holdbacks and the conversion of $ 67 million in secured convertible promissory notes receivable into equity of the acquired business.

In addition, we paid $ 5 million of holdbacks related to prior year acquisitions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total consideration for our 2022 acquisitions was primarily allocated to $ 138 million of property and equipment, $ 64 million of other intangible assets, $ 325 million of goodwill and $ 14 million of noncontrolling interests.

Other intangible assets included $ 45 million of customer relationships and $ 19 million of covenants not-to-compete.

We remain in the measurement period for most of our 2022 acquisitions, and further adjustments to our preliminary purchase price allocations may occur, specifically for the valuation of certain acquired intangibles.

The goodwill related to our 2022 acquisitions was primarily a result of expected synergies from combining the acquired businesses with our existing operations, of which less than half was tax deductible.

2021 Acquisitions

During the year ended December 31, 2021, we acquired 11 businesses primarily related to our Solid Waste business.

During the year ended December 31, 2021, we acquired 11 businesses primarily related to our Collection and Disposal businesses.

Total consideration, net of cash acquired, for all acquisitions was $ 94 million, which included $ 73 million in net cash paid and $ 21 million of other consideration, primarily purchase price holdbacks and the settlement of a preexisting promissory note with one of the acquired businesses.

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As a result, we subsequently deconsolidated the entity and account for our remaining ownership interest as an equity method investment.

2020 Acquisitions

During the year ended December 31, 2020, we acquired four businesses related to our Solid Waste business, including the acquisition of Advanced Disposal discussed further below.

Total consideration, net of cash acquired of $ 36 million, for all acquisitions was $ 4.1 billion, none of which related to other consideration such as purchase price holdbacks.

In 2020, we paid $ 3 million of holdbacks, all of which related to prior year acquisitions.

Contingent consideration obligations are primarily based on achievement by the acquired businesses of certain negotiated goals, which generally include targeted financial metrics.

Advanced Disposal — On October 30, 2020, we completed our acquisition of all outstanding shares of Advanced Disposal for $ 30.30 per share in cash, pursuant to an Agreement and Plan of Merger dated April 14, 2019, as amended on June 24, 2020.

Total enterprise value of the acquisition was $ 4.6 billion when including approximately $ 1.8 billion of Advanced Disposal’s net debt.

This acquisition grew our footprint and allows us to provide differentiated, sustainable waste management and recycling services to approximately three million new commercial, industrial and residential customers, primarily located in the Eastern half of the U.S.

The acquisition was funded using a $3.0 billion, 364-day, U.S.

revolving credit facility and our commercial paper program.

In November 2020, we issued $ 2.5 billion of senior notes and used a portion of the proceeds to repay all outstanding borrowings under the $ 3.0 billion, 364-day, U.S.

revolver and terminated the facility.

For the year ended December 31, 2022 and 2021, we incurred integration related costs of $ 10 million and $ 51 million, respectively, and for the year ended December 31, 2020, we incurred acquisition and integration related costs of $ 156 million, which were primarily classified as “Selling, general and administrative expenses.” The post-closing operating results of Advanced Disposal have been included in our consolidated financial statements, within our existing reportable segments.

Post-closing through December 31, 2020, Advanced Disposal recognized $ 205 million, $ 142 million and $ 60 million of revenue, operating expenses and selling, general and administrative expenses, respectively, which are included in our Consolidated Statement of Operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our consolidated financial statements have not been retroactively restated to include Advanced Disposal’s historical financial position or results of operations.

The acquisition was accounted for as a business combination.

In accordance with the purchase method of accounting, the purchase price paid has been allocated to the assets and liabilities acquired based upon their estimated fair values as of the acquisition date, with the excess of the purchase price over the net assets acquired recorded as goodwill.

The Company valued the customer relationship asset using an income approach;

specifically, the multi-period excess earnings method.

The significant assumptions used to value customer relationships included, among others, attrition rates, revenue growth rate, and discount rate.

The Company valued the landfill assets using an income approach;

specifically, the multi-period excess earnings method.

The significant assumptions used to value landfill assets included, among others, the forecasted revenue and revenue growth (including forecasted waste volumes and rate per ton), discount rate, and forecasted capital expenditures.

The allocation of the purchase price was finalized in October 2021.

Goodwill of $ 2.5 billion was calculated as the excess of the consideration paid over the net assets recognized and represents the future economic benefits expected to arise from other assets acquired that could not be individually identified and separately recognized.

Goodwill has been assigned to our reporting units that have integrated these operations as they are benefitting from the synergies of the combination.

Goodwill related to this acquisition is not deductible for income tax purposes.

The following table shows the purchase price allocation as of the date acquired, and adjustments to October 30, 2021 (in millions):

October 30, 2020

October 30, 2021

Accounts and other receivables

Parts and supplies

Other current assets

Assets held for sale (a)

Property and equipment

Other intangible assets

Investments in unconsolidated entities

Accounts payable

Accrued liabilities

Deferred revenues

Current portion of long-term debt

Liabilities held for sale (a)

Long-term debt, less current portion (b)

Landfill and environmental remediation liabilities

Deferred income taxes

Other liabilities

Total purchase price

(a) In connection with our acquisition of Advanced Disposal, we and Advanced Disposal entered into an agreement that provided for GFL Environmental to acquire a combination of assets from us and Advanced Disposal to address divestitures required by the U.S.

Department of Justice.

Upon acquisition these assets met the criteria for reporting discontinued operations and were classified as held for sale and included within the “Assets held for sale” and “Liabilities held for sale” line items in the above final allocation of purchase price.

Immediately following the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

acquisition, the divestiture transactions were consummated and the Company subsequently received cash proceeds from the sale of $ 856 million.

(b) At the time of acquisition, Advanced Disposal had outstanding $ 425 million of 5.625 % senior notes due November 2024, the fair value of which was $ 438 million.

In November 2020, we redeemed the notes pursuant to an optional redemption feature.

The final allocation of $ 601 million for other intangibles includes $ 572 million for customer relationships with an amortization period of 15 years and $ 29 million of other intangibles with a weighted average amortization period of seven years .

The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company and Advanced Disposal as though the companies had been combined as of January 1, 2020.

Examples of adjustments made to arrive at the pro forma amounts include, but are not limited to, the following:

• The effect of divestitures required by the U.S.

Department of Justice;

• Intercompany true-ups based on acquisition/divestiture activity;

• Transaction expenses incurred by us and Advanced Disposal;

• Adjustments to depreciation and amortization expense due to step-up in fair value of the acquired assets;

• Interest expense adjustments.

The following unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved as if the acquisition had taken place as of January 1, 2020 for the year ended December 31 (in millions, except per share amounts):

Operating revenues

Net income attributable to Waste Management, Inc.

Basic earnings per common share

Diluted earnings per common share

Weighted average common shares outstanding:

In 2022, 2021 and 2020, the aggregate sales price for divestitures of certain landfill assets, as well as collection, hauling, disposal and ancillary operations, was $ 6 million, $ 48 million and $ 856 million, and we recognized net gains of $ 5 million, $ 44 million and $ 33 million, respectively.

In 2021, divestitures primarily related to the sale of certain non-strategic Canadian operations, as discussed in Note 11.

In 2020, divestitures primarily consisted of assets required to be sold by the U.S.

Department of Justice in connection with our acquisition of Advanced Disposal, as discussed above.

The remaining amounts reported in the Consolidated Statements of Cash Flows generally relate to the sale of fixed assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Proceeds from divestitures of businesses and other assets, net of cash divested, were $ 78 million, $ 27 million and $ 96 million in 2023, 2022 and 2021, respectively.

In 2023, our proceeds are primarily the result of the sale of certain non-strategic assets.

In 2021, our proceeds are primarily the result of the sale of certain non-strategic Canadian operations, as discussed in Note 11.

Variable Interest Entities

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Our aggregate investment balance in these entities was $ 458 million and $ 321 million as of December 31, 2023 and 2022, respectively.

The debt balance related to our investments in low-income housing properties was $ 295 million and $ 156 million as of December 31, 2022 and 2021, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

balance related to our investments in low-income housing properties was $ 408 million and $ 295 million as of December 31, 2023 and 2022, respectively.

Additional information related to these investments is discussed in Note 8.

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Segment and Related Information

Our senior management evaluates, oversees and manages the financial performance of our Solid Waste operations through two operating segments.

To enhance transparency regarding our financial performance, highlight the strength and consistency of our core solid waste businesses, and underscore our commitment to sustainability through planned and ongoing investments in our Recycling Processing and Sales, as well as our WM Renewable Energy segment, beginning in the fourth quarter of 2023, our senior management revised its segment reporting to (i) reflect the financial results of our collection, transfer, disposal and resource recovery services businesses independently;

Accordingly, our senior management now evaluates, oversees and manages the financial performance of our business through four reportable segments, referred to as (i) East Tier;

(ii) West Tier;

(iii) Recycling Processing and Sales and (iv) WM Renewable Energy.

Our East Tier and West Tier, combined with certain “Other Ancillary” services that are not managed through the Tier segments, but that support our collection and disposal operations, form our Collection and Disposal businesses.

We also provide additional services not managed through our four reportable segments, which are presented as Corporate and Other.

From time to time, our operating results are significantly affected by certain transactions or events that management believes are not indicative or representative of our results.

Refer to Note 11 for an explanation of certain transactions and events affecting our operating results.

Reclassifications have been made to our prior period consolidated financial information to conform to the current year presentation.

Collection and Disposal

Our Collection and Disposal businesses provide integrated environmental services, including collection, transfer, disposal and resource recovery services.

We evaluate our Collection and Disposal businesses primarily through two geographic segments, East Tier and West Tier.

Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada.

Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada.

Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal.

The East and West Tiers are presented in this report and constitute our existing Solid Waste business.

The operating segments not evaluated and overseen through our East and West Tiers are presented herein as “Other” as these operating segments do not meet the criteria to be aggregated with other operating segments and do not meet the quantitative criteria to be separately reported.

Additionally, we provide certain ancillary services that are not managed through the Tier segments but that support our collection and disposal operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other Ancillary includes specialized services performed for customers that have differentiated needs.

These specialized services are targeted at large industrial customers managed through our Sustainability and Environmental Solutions (“SES”) business or geographically dispersed customers managed through our Strategic Business Solutions (“WMSBS”) business.

Also included within Other Ancillary are the results of non-operating entities that provide financial assurance and self-insurance support for our business, net of intercompany activity.

Included within our Collection and Disposal businesses are landfills having (i) 21 third-party power generating facilities converting our landfill gas to fuel electricity generators;

(ii) 14 third-party RNG facilities processing landfill gas to be sold to natural gas suppliers and (iii) two third-party projects delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes.

In return for providing our landfill gas, we receive royalties from each facility, including the benefit of a 15 % royalty from our WM Renewable Energy segment based on net operating revenue generated through the sale of RNG, RINs, electricity and capacity, RECs and related environmental attributes from the 83 landfill beneficial use renewable energy projects owned by WM Renewable Energy on our active landfills, which is eliminated in consolidation.

Recycling Processing and Sales

Our Recycling Processing and Sales segment includes the processing and sales of materials collected from residential, commercial and industrial customers.

The materials are delivered to and processed at one of our many recycling facilities.

Through our brokerage business, we also manage the marketing of recycling commodities that are processed in our facilities and by third parties by maintaining comprehensive service centers that continuously analyze market prices, logistics, market demands and product quality.

Our Recycling Processing and Sales segment excludes the collection of recycled materials from our residential, commercial, and industrial customers which is included within our Collection and Disposal businesses.

WM Renewable Energy

Our WM Renewable Energy segment develops, operates and promotes projects for the beneficial use of landfill gas.

Landfill gas is produced naturally as waste decomposes in a landfill.

The methane component of the landfill gas is a readily available, renewable energy source that can be gathered and used beneficially as an alternative to fossil fuel.

WM Renewable Energy converts landfill gas into several sources of renewable energy which include RNG, electricity and capacity, heat and/or steam.

WM Renewable Energy also generates RINs under the RFS program, other credits under a variety of state programs associated with the use of RNG in our compressed natural gas fleet, and RECs associated with the production of electricity.

The RINs, RECs, and other credits are sold to counterparties who are obligated under the regulatory programs and have a responsibility to procure RINs, RECs, and other credits proportionate to their fossil fuel production and imports.

RINs and RECs prices generally fluctuate in response to regulations enacted by the EPA or other regulatory bodies, as well as changes in supply and demand.

As of December 31, 2023, we had 92 landfill gas beneficial use projects producing commercial quantities of methane gas at owned or operated landfills.

For 66 of these projects, the processed gas is used to fuel electricity generators.

The electricity is then sold to public utilities, municipal utilities or power cooperatives.

For 20 of these projects, the gas is used at the landfill or delivered by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes.

For six of these projects, the landfill gas is processed to pipeline quality RNG and then sold to natural gas suppliers.

The revenues from these facilities are primarily generated through the sale of RNG, RINs, electricity and capacity, RECs and related environmental attributes.

WM Renewable Energy is charged a 15 % royalty on net operating revenue from these facilities residing on our active and closed landfills from our Collection and Disposal, and Corporate and Other businesses, which is eliminated in consolidation.

Additionally, WM Renewable Energy operates and maintains 12 third-party landfill beneficial gas use projects in return for service revenue.

Our Collection and Disposal and Corporate and Other businesses benefit from these projects as well as 32 additional third-party landfill beneficial gas use projects in the form of royalties.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Corporate and Other

We also provide additional services that are not managed through our operating segments, which are presented in this report as Corporate and Other as they do not meet the criteria to be aggregated with other operating segments and do not meet the quantitative criteria to be separately reported.

This includes the activities of our corporate office, including costs associated with our long-term incentive program, expanded service offerings and solutions (such as our investments in businesses and technologies that are designed to offer services and solutions ancillary or supplementary to our current operations) as well as our closed sites.

Also, included within our Corporate and Other businesses are closed sites that include (i) five third-party power generating facilities converting our landfill gas to fuel electricity generators;

(ii) one third-party project delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes and (iii) one third-party RNG processing landfill gas to be sold to natural gas suppliers in return for a royalty.

Additionally, Corporate and Other benefits from a 15 % royalty from our WM Renewable Energy segment based on net operating revenue generated through the sale of RNG, RINs, electricity and capacity, RECs and related environmental attributes from the nine landfill beneficial use renewable energy projects owned by WM Renewable Energy on our closed sites, which is eliminated in consolidation.

Our chief operating decision maker (“CODM”) regularly reviews financial results, operating performance, and capital expenditures of our Collection and Disposal businesses, Corporate and Other businesses, Recycling Processing and Sales segment, and our WM Renewable Energy segment to assess performance and allocate resources.

Summarized financial information concerning our reportable segments as of December 31 and for the year then ended is shown in the following table (in millions):

Depreciation,

Depletion and

Operations(e)

Years Ended December 31:

Solid Waste (a)

Corporate and Other (c)

Solid Waste (a)

Corporate and Other (c)

Solid Waste (a)

Corporate and Other (c)

(a) Income from operations provided by our Solid Waste business is generally indicative of the margins provided by our collection, landfill, transfer and recycling lines of business.

From time to time, the operating results of our reportable segments are significantly affected by certain transactions or events that management believes are not indicative or representative of our results.

Income from operations in our Solid Waste business increased in 2022, as compared with 2021, primarily due to revenue growth in our collection and disposal businesses driven by both yield and volume.

This increase was partially offset by (i) inflationary cost pressures;

(ii) labor cost increases from frontline employee wage adjustments;

(iii) divestitures, asset impairments and unusual items, discussed in Note 11 above, that impacted our East Tier results and (iv) reduced profitability in our recycling business from the decline in recycling commodity prices and lower volumes.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Income from operations in our Solid Waste business increased in 2021, as compared with 2020, primarily due to (i) revenue growth in our collection and disposal businesses driven by both yield and volume, as well as the acquisition of Advanced Disposal;

(ii) improved profitability in our recycling business from higher market prices for recycling commodities and improved costs at facilities where we have made investments in enhanced technology and equipment and (iii) changes from divestitures, asset impairments and unusual items, discussed in Note 11, that impacted both Tiers’ results.

These increases were partially offset by (i) labor cost pressure from frontline employee wage adjustments, increased turnover driving up training costs and higher overtime due to driver shortages and volume growth;

(ii) increased landfill depletion from higher volumes and revisions in landfill estimates, including the anticipated timing of capping, closure and post-closure activities at certain landfills and adjustments in 2020 to the inflation rate used to estimate capping, closure, and post-closure asset retirement obligations that benefitted costs in 2020 and (iii) inflationary cost pressures.

During 2021, the positive earnings contributions from Advanced Disposal were offset by elevated depreciation, depletion and amortization of acquired assets.

(b) “Other” includes (i) elements of our Strategic Business Solutions (“WMSBS”) business that are not included in the operations of our reportable segments;

(ii) elements of our sustainability business that includes landfill gas-to-energy operations managed by our WM Renewable Energy business, our SES business and recycling brokerage services and not included in the operations of our reportable segments;

(iii) certain other expanded service offerings and solutions and (iv) the results of non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity.

The decrease in income from operations in 2022, as compared with 2021, was due to the recognition of acquisition and integration-related costs, as well as, a prior year gain from divestitures of certain ancillary operations in our Other segment, discussed in Note 11, partially offset by improved profitability in our SES and WMSBS businesses.

The increase in income from operations for 2021, as compared to 2020, was primarily driven by increased market values for renewable energy credits generated by our WM Renewable Energy business.

(c) “Corporate and other” operating results reflect certain costs incurred for various support services that are not allocated to our reportable segments.

These support services include, among other things, treasury, legal, digital, tax, insurance, centralized service center processes, other administrative functions and the maintenance of our closed landfills.

Income from operations for “Corporate and Other” also includes costs associated with our long-term incentive program.

These costs increased in 2022, as compared with 2021, primarily due to strategic investments in our digital platform and sustainability initiatives, partially offset by lower acquisition and integration related costs.

These costs increased in 2021, as compared with 2020, due to (i) higher incentive compensation costs;

(ii) increased labor, support and integration costs following our acquisition of Advanced Disposal;

(iii) strategic investments in our digital platform;

(iv) increased health and welfare costs attributable to medical care activity generally returning to pre-pandemic levels from the lower levels experienced during 2020 and (v) charges pertaining to reserves for certain loss contingencies during 2021.

These increases were partially offset by lower consulting, advisory and legal fees following the completion of our acquisition of Advanced Disposal in the fourth quarter of 2020 and changes in the measurement of our environmental remediation obligations and recovery assets in both 2020 and 2021.

(d) Intercompany operating revenues reflect each segment’s total intercompany sales, including intercompany sales within a segment and between segments.

Depreciation,

Depletion and

Operations(c)

Year Ended December 31:

Collection and Disposal:

Other Ancillary

Collection and Disposal

Recycling Processing and Sales (a)

WM Renewable Energy

Corporate and Other

Collection and Disposal:

Other Ancillary

Collection and Disposal

Recycling Processing and Sales

WM Renewable Energy

Corporate and Other

Collection and Disposal:

Other Ancillary

Collection and Disposal

Recycling Processing and Sales

WM Renewable Energy

Corporate and Other

(a) Included within income from operations for our Recycling Processing and Sales segment is a $ 168 million goodwill impairment charge related to a business engaged in accelerating film and plastic wrap recycling capabilities, which was partially offset by the recognition of $ 46 million of income related to the reversal of a liability for contingent consideration associated with our investment in such business.

(b) Intercompany operating revenues reflect each segment’s total intercompany sales, including intercompany sales within a segment and between segments.

Transactions within and between segments are generally made on a basis intended to reflect the market value of the service.

(e) For those items included in the determination of income from operations, the accounting policies of the segments are the same as those described in Note 2.

(f) Includes non-cash items.

Capital expenditures are reported in our reportable segments at the time they are recorded within the segments’ property and equipment balances and, therefore, include timing differences for amounts accrued but not yet paid.

(c) For those items included in the determination of income from operations, the accounting policies of the segments are the same as those described in Note 2.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(g) The reconciliation of total assets reported above to total assets in the Consolidated Balance Sheets as of December 31 is as follows (in millions):

Total assets, as reported above

(d) Includes non-cash items.

Capital expenditures and are reported in our reportable segments at the time they are recorded within the segments’ property and equipment balances and, therefore, include timing differences for amounts accrued but not yet paid.

Total assets by reportable segment as of December 31 are as follows (in millions):

Collection and Disposal:

Other Ancillary

Collection and Disposal

Recycling Processing and Sales

WM Renewable Energy

Corporate and Other

Elimination of intercompany investments and advances

Total assets, per Consolidated Balance Sheet

(h) Goodwill is included within each segment’s total assets.

For segment reporting purposes, our material recovery facilities are included as a component of their respective Tiers and our recycling brokerage services are included as part of our “Other” operations.

The following table presents changes in goodwill during the reported periods by segment (in millions):

Balance, December 31, 2020

Acquired goodwill (a)

Divested goodwill

Foreign currency translation and other

Balance, December 31, 2021

Acquired goodwill

Divested goodwill

Foreign currency translation and other

Balance, December 31, 2022

Includes $ 26 million of post-closing acquisition adjustments related to our acquisition of Advanced Disposal.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The mix of operating revenues from our major lines of business for the year ended December 31 are as follows (in millions):

Years Ended December 31:

Other collection

Total collection

Intercompany (b)

(a) The “Other” line of business includes (i) certain services provided by our WMSBS business;

(ii) certain services within our sustainability business including our landfill gas-to-energy operations managed by our WM Renewable Energy business and (iii) certain other expanded service offerings and solutions and reflects the results of non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity.

Revenue attributable to collection, landfill, transfer and recycling services provided by our “Other” businesses has been reflected as a component of the relevant line of business for purposes of presentation in this table.

(b) Intercompany revenues between lines of business are eliminated in the Consolidated Financial Statements included within this report.

Total Collection and Disposal

Recycling Processing and Sales

WM Renewable Energy

Corporate and Other

Other collection

Total collection

Total Collection and Disposal

Recycling Processing and Sales

WM Renewable Energy

Corporate and Other

Other collection

Total collection

Total Collection and Disposal

Recycling Processing and Sales

WM Renewable Energy

Corporate and Other

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fluctuations in our operating results may be caused by many factors, including period-to-period changes in the relative contribution of revenue by each line of business, changes in commodity prices and general economic conditions.

Our revenues and income from operations typically reflect seasonal patterns.

Our operating revenues tend to be somewhat higher in summer months, primarily due to the higher construction and demolition waste volumes.

The volumes of industrial and residential waste in certain regions where we operate also tend to increase during the summer months.

Our second and third quarter revenues and results of operations typically reflect these seasonal trends.

Our 2020 operating results were negatively impacted by COVID-19, as volume declines began in March 2020 in our landfill, industrial and commercial collection businesses due to steps taken by national and local governments to slow the spread of the virus, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing.

Throughout 2021 and 2022, our volumes recovered from the sharp decline experienced in 2020, with minimal impact from the resurgence in transmission of COVID-19 associated with recent virus variants, as communities and businesses remained open.

However, the potential for future resurgence in transmission of COVID-19 and related business closures, due to virus variants or other pandemic conditions, could adversely impact our volumes and costs in the future.

Our financial and operating results may fluctuate for many reasons, including period-to-period changes in the relative contribution of revenue by each line of business, changes in commodity prices and general economic conditions.

Our operating revenues and volumes typically experience seasonal increases in the summer months that are reflected in second and third quarter revenues and results of operations.

Service or operational disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly affect the operating results of the geographic areas affected.

Extreme weather events may also lead to supply chain disruption and delayed project development, or disruption of our customers’ businesses, reducing the amount of waste generated by their operations.

On the other hand, certain destructive weather and climate conditions, such as wildfires in the Western U.S.

Conversely, certain destructive weather and climate conditions, such as wildfires in the Western U.S.

and hurricanes that most often impact our operations in the Southern and Eastern U.S.

1 unchanged sentence

While weather-related and other event-driven special projects can boost revenues through additional work for a limited time, due to significant start-up costs and other factors, such revenue can generate earnings at comparatively lower margins.

Net operating revenues relating to operations in the U.S.

and Canada for the year ended December 31 are as follows (in millions):

Property and equipment, net of accumulated depreciation and depletion, relating to operations in the U.S.

and Canada for the year ended December 31 are as follows (in millions):

Net operating revenues relating to operations for the year ended December 31 are as follows (in millions):

(a) Primarily related to recently acquired smaller recycling-related operations in the Netherlands .

Property and equipment, net of accumulated depreciation and depletion, relating to operations as of December 31 are as follows (in millions):

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data