What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-04-25 compared with 2023-10-25 · 127 added, 235 removed, 375 unchanged (49% of the section changed)

3 unchanged sentences

(In Millions, Except Share and Par Value Amounts)

September 30,

Current assets:

39 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Operating revenues

18 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Consolidated net income

12 unchanged sentences

(In Millions)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

46 unchanged sentences

(Loss) Income

Three Months Ended September 30:

Balance, June 30, 2023

Consolidated net income

Other comprehensive income (loss), net of tax

Cash dividends declared of $ 0.70 per common share

Equity-based compensation transactions, net

Common stock repurchase program

Balance, September 30, 2023

Balance, June 30, 2022

Consolidated net income

Other comprehensive income (loss), net of tax

Cash dividends declared of $ 0.65 per common share

Equity-based compensation transactions, net

Common stock repurchase program

Balance, September 30, 2022

See Notes to Condensed Consolidated Financial Statements.

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ─ (Continued)

(In Millions, Except Shares in Thousands)

Waste Management, Inc.

Stockholders’ Equity

Comprehensive

Treasury Stock

Noncontrolling

(Loss) Income

Nine Months Ended September 30:

Balance, December 31, 2023

4 unchanged sentences

Common stock repurchase program

Balance, September 30, 2023

Balance, March 31, 2024

Balance, December 31, 2022

4 unchanged sentences

Common stock repurchase program

Balance, September 30, 2022

Balance, March 31, 2023

See Notes to Condensed Consolidated Financial Statements.

12 unchanged sentences

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, 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 that we allocate to 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.

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 segments is included in Note 7.

The Condensed Consolidated Financial Statements as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 are unaudited.

Our 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 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 (“RNG”), which is a significant source of fuel that we allocate to our natural gas fleet.

Our senior management 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 (“Other Ancillary”) 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 7 for further discussion.

The Condensed Consolidated Financial Statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023 are unaudited.

In the opinion of management, these financial statements include all adjustments, which, unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, comprehensive income, cash flows, and changes in equity for the periods presented.

6 unchanged sentences

Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenue Recognition

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

For example, revenue typically is recognized as waste is collected, tons are received at our landfills or transfer stations, or recycling commodities are collected or delivered as product.

We bill for certain services prior to performance.

For example, revenue typically is recognized as waste is collected, tons are received at our landfills or transfer stations, or recycling and other commodities,

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

such as RNG, electricity and capacity, Renewable Identification Numbers (“RINs”) and Renewable Energy Credits (“RECs”), are sold.

We also bill for certain services prior to performance.

Such services include, among others, certain commercial and residential contracts, and equipment rentals.

5 unchanged sentences

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 Condensed Consolidated Balance Sheets.

As of September 30, 2023 and December 31, 2022, we had $ 207 million and $ 192 million, respectively, of deferred contract costs, of which $ 145 million and $ 137 million, respectively, was related to deferred sales incentives.

As of March 31, 2024 and December 31, 2023, we had $ 209 million and $ 207 million, respectively, of deferred contract costs, of which $ 150 million and $ 148 million, respectively, were related to deferred sales incentives.

Amounts for our operating lease right-of-use assets are recorded in long-term other assets and the current and long-term portion of our operating lease liabilities are reflected in accrued liabilities and other long-term liabilities, respectively, in our Condensed Consolidated Balance Sheets.

12 unchanged sentences

Liabilities for landfill and environmental remediation costs are presented in the table below (in millions):

September 30, 2023

March 31, 2024

December 31, 2023

2 unchanged sentences

Current (in accrued liabilities)

The changes to landfill and environmental remediation liabilities for the nine months ended September 30, 2023 are reflected in the table below (in millions):

The changes to landfill and environmental remediation liabilities for the three months ended March 31, 2024 are reflected in the table below (in millions):

Environmental

3 unchanged sentences

Interest accretion

Revisions in estimates and interest rate assumptions

Revisions in estimates

Acquisitions, divestitures and other adjustments

September 30, 2023

March 31, 2024

At several of our landfills, we provide financial assurance by depositing cash into restricted trust funds for purposes of settling final capping, closure, post-closure and environmental remediation obligations.

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 September 30, 2023:

September 30,

Commercial paper program (weighted average interest rate of 5.5 % as of September 30, 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 September 30, 2023 and 3.2 % as of December 31, 2022)

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

Commercial paper program (weighted average interest rate of 5.5 % as of March 31, 2024 and 5.6 % as of December 31, 2023)

Senior notes, maturing through 2050, interest rates ranging from 0.75 % to 7.75 % (weighted average interest rate of 3.7 % as of March 31, 2024 and 3.7 % as of December 31, 2023)

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

Tax-exempt bonds, maturing through 2048, fixed and variable interest rates ranging from 0.55 % to 4.4 % (weighted average interest rate of 2.9 % as of September 30, 2023 and 2.7 % as of December 31, 2022)

Financing leases and other, maturing through 2071 (weighted average interest rate of 4.8 % as of September 30, 2023 and 4.7 % as of December 31, 2022) (a)

Tax-exempt bonds, maturing through 2053, fixed and variable interest rates ranging from 0.55 % to 5.0 % (weighted average interest rate of 3.2 % as of March 31, 2024 and 3.3 % as of December 31, 2023)

Financing leases and other, maturing through 2082 (weighted average interest rate of 4.9 % as of March 31, 2024 and 5.0 % as of December 31, 2023) (a)

Debt issuance costs, discounts and other

3 unchanged sentences

Debt Classification

As of September 30, 2023, we had approximately $ 2.4 billion of debt maturing within the next 12 months, including (i) $ 489 million of short-term borrowings under our commercial paper program (net of related discount on issuance);

As of March 31, 2024, we had approximately $ 3.1 billion of debt maturing within the next 12 months, including (i) $ 750 million of short-term borrowings under our commercial paper program (net of related discount on issuance);

(ii) $ 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;

(iii) $ 156 million of 3.5 % senior notes that mature in May 2024 and (iv) $ 174 million of other debt with scheduled maturities within the next 12 months, including $ 60 million of tax-exempt bonds.

As of September 30, 2023, we have classified $ 2.1 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.

(iii) $ 156 million of 3.5 % senior notes that mature in May 2024;

(iv) $ 422 million of 3.125 % senior notes that mature in March 2025 and (v) $ 180 million of other debt with scheduled maturities within the next 12 months, including $ 60 million of tax-exempt bonds.

As of March 31, 2024, we have classified $ 2.8 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.

and Canadian revolving credit facility (“$3.5 billion revolving credit facility”), as discussed below.

The remaining $ 336 million of debt maturing in the next 12 months is classified as current obligations.

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

Access to and Utilization of Credit Facilities and Commercial Paper Program

$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.

2 unchanged sentences

and Standard and Poor’s Global Ratings.

As of September 30, 2023, we had no outstanding borrowings under this facility.

We had $ 181 million of letters of credit issued and $ 489 million 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

As of March 31, 2024, we had no outstanding borrowings under this facility.

We had $ 181 million of letters of credit issued and $ 750 million 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 $ 2.6 billion as of March 31, 2024.

WM Holdings, a wholly-owned subsidiary of WMI, guarantees all of the obligations under the $3.5 billion revolving credit facility.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

$ 2.8 billion as of September 30, 2023.

WM Holdings, a wholly-owned subsidiary of WMI, guarantees all the obligations under the $3.5 billion revolving credit facility.

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

1 unchanged sentence

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

As of September 30, 2023, we had $ 489 million of outstanding borrowings (net of related discount on issuance) under our commercial paper program.

Term Loan — In May 2022, we entered into our $ 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 the 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 Term Loan had a contractual maturity of May 2024, but we elected to repay all outstanding balances under the 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 September 30, 2023, we had utilized $ 801 million of other uncommitted letter of credit lines with terms maturing through December 2026.

As of March 31, 2024, we had $ 750 million of outstanding borrowings (net of related discount on issuance) under our commercial paper program.

Other Letter of Credit Lines — As of March 31, 2024, we had utilized $ 846 million of other uncommitted letter of credit lines, with terms maturing through December 2027.

Debt Borrowings and Repayments

Commercial Paper Program — During the nine months ended September 30, 2023, we made cash repayments of $ 15.3 billion, which were partially offset by $ 14.1 billion of cash borrowings (net of related discount on issuance).

A portion of these borrowings were repaid with proceeds from 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 sustainability capital investment program.

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.

Tax-Exempt Bonds — We issued $ 50 million of tax-exempt bonds during the nine months ended September 30, 2023.

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, material recovery 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 decrease in our financing leases and other debt obligations during the nine months ended September 30, 2023 is due to $ 91 million of cash repayments of debt at maturity, partially offset by an increase of $ 78 million primarily related to non-cash financing leases.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 and we received cash of $ 19 million to settle the related assets.

Our effective income tax rate was 24.1 % and 24.0 % for the three and nine months ended September 30, 2023, respectively, compared with 22.8 % and 23.5 % for the three and nine months ended September 30, 2022, respectively.

The increase in our effective income tax rate when comparing the three and nine months ended September 30, 2023 and 2022 was primarily driven by (i) an unfavorable increase in permanent differences between taxable income and accounting income associated with our treatment of landfill closure and post-closure costs and (ii) a decrease in the excess tax benefits associated with equity-based compensation.

The impacts of these items were partially offset by increased federal tax credits.

Commercial Paper Program — During the three months ended March 31, 2024, we made cash repayments of $ 4.5 billion, which were partially offset by $ 4.4 billion of cash borrowings (net of related discount on issuance).

Financing Leases and Other — The decrease in our financing leases and other debt obligations during the three months ended March 31, 2024 is due to $ 42 million of cash repayments at debt maturity, partially offset by an increase of $ 25 million primarily related to non-cash financing leases.

Our effective income tax rate was 18.6 % and 23.6 % for the three months ended March 31, 2024 and 2023, respectively.

The decrease in our effective income tax rate when comparing the three months ended March 31, 2024 and 2023 was primarily driven by (i) an increase in federal tax credits and (ii) an increase in the excess tax benefits associated with equity-based compensation;

partially offset by an increase in pre-tax income in the current period.

We evaluate our effective income tax rate at each interim period and adjust it as facts and circumstances warrant.

Permanent Differences — During the three and nine months ended September 30, 2023, we recognized additional income tax expense when compared to prior periods of $ 10 million and $ 16 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.

Equity-Based Compensation – During the three and nine months ended September 30, 2023, we recognized a reduction in our income tax expense of $ 1 million and $ 11 million, respectively, for excess tax benefits related to the vesting or exercise of equity-based compensation awards compared with $ 5 million and $ 17 million, respectively, for the comparable prior year periods.

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

Investments Qualifying for Federal Tax Credits

Renewable Natural Gas — Through our subsidiaries including our WM Renewable Energy segment, we have invested in building landfill gas-to-energy facilities in the U.S.

and Canada that produce renewable electricity and RNG.

We expect our new RNG facilities to qualify for federal tax credits and to realize those credits through 2027 under Sections 48 and 45Z of the Internal Revenue Code.

During the three months ended March 31, 2024 and 2023, we recognized a reduction in our income tax expense of $ 37 million and $ 2 million, respectively due to federal tax credits expected to be realized from our RNG investments.

Low-Income Housing — We have significant financial interests in entities established to invest in and manage low-income housing properties.

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

1 unchanged sentence

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 Condensed Consolidated Statements of Operations.

During the three and nine months ended September 30, 2023, we recognized $ 18 million and $ 43 million of net losses, respectively, and a reduction in our income tax expense of $ 28 million and $ 76 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 three and nine months ended September 30, 2023, we recognized interest expense of $ 3 million and $ 10 million, respectively, associated with our investments in low-income housing properties.

During the three and nine months ended September 30, 2022, we recognized $ 16 million and $ 47 million of net losses, respectively, and a reduction in our income tax expense of $ 26 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 three and nine months ended September 30, 2022, we recognized interest expense of $ 5 million and $ 10 million,

During the three months ended March 31, 2024 and 2023, we recognized $ 20 million and $ 13 million of net losses, respectively, and a reduction in our income tax expense of $ 28 million and $ 22 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 three months ended March 31, 2024 and 2023, we recognized interest expense of $ 6 million and $ 4 million, respectively, associated with our investments in low-income housing properties.

See Note 11 for additional information related to these unconsolidated variable interest entities.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

respectively, associated with our investments in low-income housing properties.

See Note 13 for additional information related to these unconsolidated variable interest entities.

Equity-Based Compensation — During the three months ended March 31, 2024 and 2023, we recognized a reduction in our income tax expense of $ 21 million and $ 7 million, respectively, for excess tax benefits related to the vesting or exercise of equity-based compensation awards.

Earnings Per Share

Basic and diluted earnings per share were computed using the following common share data (shares in millions):

Three Months Ended

Nine Months Ended

September 30,

Basic and diluted earnings per share for the three months ended March 31 were computed using the following common share data (shares in millions):

Number of common shares outstanding at end of period

30 unchanged sentences

No additional liabilities have been recorded for these intercompany guarantees because all of the underlying obligations are reflected in our Condensed Consolidated Balance Sheets.

As of September 30, 2023, we have guaranteed the obligations and certain performance requirements of third parties in connection with both consolidated and unconsolidated entities, including guarantees to cover the difference, if any, between the sale value and the guaranteed market or contractually-determined value of certain homeowner’s properties that are adjacent to or near 19 of our landfills.

As of March 31, 2024, we have guaranteed the obligations and certain performance requirements of third parties in connection with both consolidated and unconsolidated entities, including guarantees to cover the difference, if any, between the sale value and the guaranteed market or contractually-determined value of certain homeowner’s properties that are adjacent to or near 19 of our landfills.

We have also agreed to indemnify certain third-party purchasers against liabilities associated with divested operations prior to such sale.

11 unchanged sentences

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 $ 120 million higher than the $ 185 million recorded in the Condensed Consolidated Balance Sheet as of September 30, 2023.

If we used the high ends of such ranges (where estimable), our aggregate potential liability would be approximately $ 18 million higher than the $ 211 million recorded in the Condensed Consolidated Balance Sheet as of March 31, 2024.

Our ultimate responsibility may differ materially from current estimates.

2 unchanged sentences

These adjustments could be material in any given period.

As of September 30, 2023, 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”).

As of March 31, 2024, we had 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, or 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.

Each of the NPL sites we own were 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.

8 unchanged sentences

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 September 30, 2023 and December 31, 2022, the recorded liability for MIMC’s estimated potential share of the EPA’s proposed remedy was $ 68 million.

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.

MIMC and IPC have engaged with the EPA and provided responses to the EPA letter.

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

As of March 31, 2024 and December 31, 2023, the recorded liability was $ 85 million.

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.

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.

6 unchanged sentences

Compliance with these agreements inherently involves subjective determinations and may result in disputes, including litigation.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Litigation — We are subject to various proceedings, lawsuits, disputes and claims arising in the ordinary course of our business.

Many of these actions raise complex factual and legal issues and are subject to uncertainties.

Actions that have been filed against us, and that may be filed against us in the future, include personal injury, property damage, commercial, customer, and employment-related claims, including purported state and national class action lawsuits related to:

Actions that have been filed against us, and that may be filed against us in the future, include personal injury, property damage,

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

commercial, customer, and employment-related claims, including purported state and national class action lawsuits related to:

alleged environmental contamination, including releases of hazardous material and odors;

8 unchanged sentences

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.

We will vigorously defend against this pending suit.

On March 27, 2024, the Court denied our motion to dismiss except as to one of our officers, and the case will proceed to discovery.

We intend to 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.

6 unchanged sentences

As a result of some of these agreements, certain of our subsidiaries are participating employers in a number of trustee-managed multiemployer defined benefit pension plans (“Multiemployer Pension Plans”) for the covered employees.

In connection with our ongoing renegotiation of various collective bargaining agreements, we may discuss and negotiate for the complete or partial withdrawal from one or more of these Multiemployer Pension Plans.

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.

2 unchanged sentences

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).

Tax Matters — We maintain a liability for uncertain tax positions, the balance of which management believes is adequate.

Results of audit assessments by taxing authorities are not currently expected to have a material adverse effect on our financial condition, results of operations or cash flows.

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

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Tax Matters — 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.

annual tax return.

Any unresolved issues as of the tax return filing date are subject to routine examination procedures.

2 unchanged sentences

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 September 30, 2023 and 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 Condensed 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.

We maintain a liability for uncertain tax positions, the balance of which management believes is adequate.

Results of audit assessments by taxing authorities are not currently expected to have a material adverse effect on our financial condition, results of operations or cash flows.

As of March 31, 2024 and December 31, 2023, the IRS deposit, net of reserve for uncertain tax positions, is classified as a component of other long-term assets in the Company’s Condensed Consolidated Balance Sheets.

Segment and Related Information

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.

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 and are not qualitatively significant at this time.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Summarized financial information concerning our reportable segments is shown in the following table (in millions):

Three Months Ended September 30:

Solid Waste (a)

Corporate and Other (c)

Solid Waste (a)

Corporate and Other (c)

Our senior management 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.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Nine Months Ended September 30:

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 and includes elements of profitability from our “Other” segment.

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 primarily due to revenue growth in our collection and disposal business driven by yield.

These increases were partially offset by (i) inflationary cost pressures;

(ii) labor cost increases from frontline employee wage adjustments and annual merit increases and (iii) reduced profitability in our recycling business from the decline in recycling commodity prices.

In addition, fuel tax credits in 2022 were not recognized until August 2022 due to the timing of the Inflation Reduction Act of 2022 (“IRA”).

This created a $ 26 million negative impact to income from operations for the three months ended September 30, 2023, but is broadly flat for the nine months ended September 30, 2023.

(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 Sustainability and Environmental Solutions 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 was due to (i) reduced profitability in our WM Renewable Energy business primarily driven by decreases in the value of energy prices and renewable fuel standard credits and (ii) the decline in recycling brokerage commodity prices affecting profitability in our recycling 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.

Summarized financial information concerning our reportable segments for the three months ended March 31 is shown in the following table (in millions):

Operations(b)

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) 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.

(b) 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 1.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

The improvement in income from operations was primarily driven by (i) lower annual incentive compensation costs;

(ii) lower professional fees in connection with investments in our digital program, as certain strategic projects have now been implemented and (iii) a charge during the first quarter of 2022 to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site.

These lower costs were partially offset by annual merit increases and litigation costs.

(d) 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 .

The mix of operating revenues from our major lines of business are as follows (in millions):

Three Months Ended

Nine Months Ended

September 30,

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

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;

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 Condensed Consolidated Financial Statements included within this report.

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.

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

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.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

2 unchanged sentences

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.

During the nine months ended September 30, 2023, we completed solid waste and recycling acquisitions with total consideration of $ 138 million, which included $ 129 million in cash paid and $ 9 million of other consideration, specifically purchase price holdbacks.

In addition, we paid $ 10 million of holdbacks, of which $ 6 million related to prior year acquisitions.

Total consideration for our 2023 acquisitions was allocated to $ 22 million of property and equipment, $ 46 million of other intangible assets, primarily customer relationships, and $ 76 million of goodwill with the remaining allocated to liabilities assumed from the ordinary course of business.

We remain in the measurement period for most of our acquisitions, and adjustments to our preliminary purchase price allocation may occur.

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

(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net

(Gain) loss from divestitures, asset impairments and unusual items, net for the nine months ended September 30, 2023 were nominal.

During the first quarter of 2022, we recognized 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 6.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accumulated Other Comprehensive (Loss) Income

5 unchanged sentences

Net current period other comprehensive income (loss)

Balance, September 30, 2023

Balance, March 31, 2024

Common Stock Repurchase Program

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

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In the first quarter of 2023, we entered into an accelerated share repurchase (“ASR”) agreement to repurchase $ 350 million of our common stock.

At the beginning of the repurchase period, we delivered $ 350 million cash and received 1.9 million shares based on a stock price of $ 150.34 .

The ASR agreement completed in May 2023 and we received 0.4 million additional shares based on a final weighted average price of $ 153.90 .

In the second quarter of 2023, we entered into an ASR agreement to repurchase $ 250 million of our common stock and received 1.5 million shares based on a final weighted average stock price of $ 163.62 .

Subsequent to the completion of the ASR, we repurchased 0.1 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 $ 22 million, inclusive of per-share commissions, at a weighted average price of $ 164.79 , of which $ 2 million was paid in July 2023.

In the third quarter of 2023, we entered into an ASR agreement to repurchase $ 350 million of our common stock and received 2.2 million shares based on a final weighted average stock price of $ 156.87 .

Additionally, we repurchased 0.1 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 $ 19.5 million, inclusive of per-share commissions, at a weighted average price of $ 168.04 , of which $ 1.5 million was paid in October 2023.

The Inflation Reduction Act of 2022 (“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 discussion of our common stock repurchase program above is exclusive of the 1% excise tax.

As of September 30, 2023, the Company has authorization for $ 508.5 million of future share repurchases, exclusive of the 1% excise tax discussed above.

In February 2024, we entered into an accelerated share repurchase (“ASR”) agreement to repurchase $ 250 million of our common stock.

At the beginning of the repurchase period, we delivered $ 250 million cash and initially received 1.0 million shares based on a stock price of $ 199.16 , exclusive of the applicable 1% excise tax.

The ASR agreement completed in April 2024 and we received 0.2 million additional shares based on a final weighted average price of $ 206.23 .

As of March 31, 2024, the Company has authorization for $ 1.25 billion of future share repurchases.

Any future share repurchases pursuant to this authorization of our Board of Directors 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.

2 unchanged sentences

Our assets and liabilities that are measured at fair value on a recurring basis include the following (in millions):

September 30,

Quoted prices in active markets (Level 1):

3 unchanged sentences

Available-for-sale securities (a)

Significant unobservable inputs (Level 3):

Redeemable preferred stock (b)

(a) Our available-for-sale securities primarily relate to debt securities with maturities over the next ten years .

(b) Our investment, which is classified as an available-for-sale debt security, 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

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Fair Value of Debt

As of September 30, 2023 and December 31, 2022, the carrying value of our debt was $ 15.4 billion and $ 15.0 billion, respectively.

The estimated fair value of our debt was approximately $ 13.8 billion as of September 30, 2023 and December 31, 2022.

As of March 31, 2024 and December 31, 2023, the carrying value of our debt was $ 16.1 billion and $ 16.2 billion, respectively.

The estimated fair value of our debt was approximately $ 15.1 billion and $ 15.6 billion as of March 31, 2024 and December 31, 2023, respectively.

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.

1 unchanged sentence

The use of different assumptions or estimation methodologies could have a material effect on the estimated fair values.

The fair value estimates are based on Level 2 inputs of the fair value hierarchy available as of September 30, 2023 and December 31, 2022.

The fair value estimates are based on Level 2 inputs of the fair value hierarchy available as of March 31, 2024 and December 31, 2023.

These amounts have not been revalued since those dates, and current estimates of fair value could differ significantly from the amounts presented.

4 unchanged sentences

Accordingly, we account for these investments under the equity method of accounting.

Our aggregate investment balance in these entities was $ 278 million and $ 321 million as of September 30, 2023 and December 31, 2022, respectively.

The debt balance related to our investments in low-income housing properties was $ 243 million and $ 295 million as of September 30, 2023 and December 31, 2022, respectively.

Our aggregate investment balance in these entities was $ 438 million and $ 458 million as of March 31, 2024 and December 31, 2023, respectively.

The debt balance related to our investments in low-income housing properties was $ 395 million and $ 408 million as of March 31, 2024 and December 31, 2023, respectively.

Additional information related to these investments is discussed in Note 4.

3 unchanged sentences

These amounts are recorded in other receivables, investments in unconsolidated entities and long-term other assets in our Condensed Consolidated Balance Sheets, as appropriate.

We also reflect our share of the unrealized gains and losses on available-for-sale securities held by these trusts as a component of our accumulated other comprehensive (loss) income.

Our investments and receivables related to these trusts had an aggregate carrying value of $ 94 million and $ 93 million as of September 30, 2023 and December 31, 2022, respectively.

We also reflect our share of the unrealized gains and losses on available-for-sale securities held by these trusts as a component of our accumulated other comprehensive income (loss).

Our investments and receivables related to these trusts had an aggregate carrying value of $ 107 million and $ 104 million as of March 31, 2024 and December 31, 2023, respectively.

Consolidated Variable Interest Entities — Trust funds for which we are the sole beneficiary are consolidated because we are the primary beneficiary.

1 unchanged sentence

Unrealized gains and losses on available-for-sale securities held by these trusts are recorded as a component of accumulated other comprehensive income (loss).

These trusts had a fair value of $ 116 million and $ 113 million as of September 30, 2023 and December 31, 2022, respectively.

These trusts had a fair value of $ 120 million and $ 119 million as of March 31, 2024 and December 31, 2023, respectively.

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-Q

Item 1. Financial Statements