What changed in this filing

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Item 1. Financial Statements

2024-07-25 compared with 2024-04-25 · 212 added, 95 removed, 407 unchanged (43% of the section changed)

8 unchanged sentences

Parts and supplies

Other current assets

Total current assets

3 unchanged sentences

Investments in unconsolidated entities

Other long-term assets

LIABILITIES AND EQUITY

8 unchanged sentences

Landfill and environmental remediation liabilities

Other liabilities

Other long-term liabilities

Total liabilities

18 unchanged sentences

Three Months Ended

Six Months Ended

Operating revenues

7 unchanged sentences

Interest expense, net

Equity in net losses of unconsolidated entities

Equity in net income (losses) of unconsolidated entities

Income before income taxes

8 unchanged sentences

Three Months Ended

Six Months Ended

Consolidated net income

12 unchanged sentences

(In Millions)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

8 unchanged sentences

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

Equity in net losses of unconsolidated entities, net of dividends

Equity in net (income) losses of unconsolidated entities, net of dividends

Change in operating assets and liabilities, net of effects of acquisitions and divestitures:

35 unchanged sentences

(Loss) Income

Balance, December 31, 2023

Three Months Ended June 30:

Balance, March 31, 2024

Consolidated net income

3 unchanged sentences

Common stock repurchase program

Adoption of new accounting standard

Balance, June 30, 2024

Balance, March 31, 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, June 30, 2023

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

Six Months Ended June 30:

Balance, December 31, 2023

4 unchanged sentences

Common stock repurchase program

Balance, March 31, 2023

Adoption of new accounting standard

Balance, June 30, 2024

Balance, December 31, 2022

Consolidated net income

Other comprehensive income (loss), net of tax

Cash dividends declared of $ 1.40 per common share

Equity-based compensation transactions, net

Common stock repurchase program

Balance, June 30, 2023

See Notes to Condensed Consolidated Financial Statements.

13 unchanged sentences

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.

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

5 unchanged sentences

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.

The Condensed Consolidated Financial Statements as of June 30, 2024 and for the three and six months ended June 30, 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.

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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 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.

As of June 30, 2024 and December 31, 2023, we had $ 217 million and $ 207 million, respectively, of deferred contract costs, of which $ 151 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.

6 unchanged sentences

However, our overall credit risk associated with trade receivables is limited due to the large number and diversity of customers we serve.

Reclassifications

When necessary, reclassifications have been made to our prior period financial information to conform to the current year presentation and are not material to our consolidated financial statements.

Other Current Assets

As of June 30, 2024, other current assets included $ 778 million of investments in certain WM tax-exempt bonds.

We purchased these bonds because they were subject to mandatory scheduled remarketings during a period of time that we determined that we were unable to remarket the bonds to third-party investors because we were in possession of material non-public information about the pending announcement of our planned acquisition of Stericycle, Inc.

(“Stericycle”).

These investments are classified as current because we have the intent and ability to remarket the bonds within the next twelve months.

The related tax-exempt debt is included in our Condensed Consolidated Balance Sheet as of June 30, 2024 as a component of long-term debt.

In July 2024 we received $ 349 million from the successful remarketing of these tax-exempt bonds and expect to successfully remarket the remaining bonds held within the third quarter of 2024.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Reclassifications

When necessary, reclassifications have been made to our prior period financial information to conform to the current year presentation and are not material to our Condensed Consolidated Financial Statements.

Landfill and Environmental Remediation Liabilities

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

March 31, 2024

June 30, 2024

December 31, 2023

2 unchanged sentences

Current (in accrued liabilities)

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

The changes to landfill and environmental remediation liabilities for the six months ended June 30, 2024 are reflected in the table below (in millions):

Environmental

5 unchanged sentences

Acquisitions, divestitures and other adjustments

March 31, 2024

June 30, 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)

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 March 31, 2024:

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)

Commercial paper program (weighted average interest rate of 5.5 % as of June 30, 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 June 30, 2024 and December 31, 2023)

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

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)

Tax-exempt bonds, maturing through 2053, fixed and variable interest rates ranging from 0.55 % to 5.0 % (weighted average interest rate of 3.3 % as of June 30, 2024 and December 31, 2023)

Financing leases and other, maturing through 2082 (weighted average interest rate of 5.0 % as of June 30, 2024 and December 31, 2023) (a)

Debt issuance costs, discounts and other

3 unchanged sentences

Debt Classification

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);

As of June 30, 2024, we had approximately $ 3.8 billion of debt maturing within the next 12 months, including (i) $ 1.6 billion 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;

(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.

(iii) $ 422 million of 3.125 % senior notes that mature in March 2025 and (iv) $ 167 million of other debt with scheduled maturities within the next 12 months, including $ 30 million of tax-exempt bonds.

As of June 30, 2024, we have classified $ 3.6 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”) and our issuance of $ 1.5 billion of senior notes in July 2024, the proceeds of which were used primarily to reduce outstanding borrowings under our commercial paper program.

The remaining $ 242 million of debt maturing in the next 12 months is classified as current obligations.

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.

The interest rates we pay on outstanding U.S.

or Canadian loans are based on the Secured Overnight Financing Rate (“SOFR”) administered by the Federal Reserve Bank of New York or the Canadian Dollar Offered Rate (“CDOR”), respectively, 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.

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.

$3.5 Billion Revolving Credit Facility — In May 2024, we amended and restated our $3.5 billion U.S.

and Canadian revolving credit facility, extending the term through May 2029.

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.

Waste Management of Canada Corporation and WM Quebec Inc., each an indirect wholly-owned subsidiary of WMI, are borrowers under the $3.5 billion revolving credit facility, and the agreement permits borrowing in Canadian dollars up to the U.S.

dollar equivalent of $ 375 million, with such borrowings to be repaid in Canadian dollars.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

The interest rates we pay on outstanding U.S.

or Canadian loans are based on the Secured Overnight Financing Rate (“SOFR”) administered by the Federal Reserve Bank of New York or the Canadian Overnight Repo Rate Average (“CORRA”) administered by the Bank of Canada, respectively, plus a spread depending on our senior public debt rating assigned by Moody’s Investors Service, Inc.

and Standard and Poor’s Global Ratings.

The spread above SOFR or CORRA can range from 0.585 % to 1.025 % per annum, plus applicable credit adjustments.

We also pay certain other fees set forth in the $3.5 billion revolving credit facility agreement, including a facility fee based on the aggregate commitment, regardless of usage.

As of June 30, 2024, we had no outstanding borrowings under this facility.

We had $ 180 million of letters of credit issued and $ 1.6 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 $ 1.7 billion as of June 30, 2024.

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 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.

As of June 30, 2024, we had $ 1.6 billion of outstanding borrowings (net of related discount on issuance) under our commercial paper program.

In July 2024, we issued $ 1.5 billion of new senior notes and used the proceeds primarily to repay outstanding commercial paper borrowings.

Other Letter of Credit Lines — As of June 30, 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 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.

Commercial Paper Program — During the six months ended June 30, 2024, we made cash repayments of $ 8.5 billion, which were more than offset by $ 9.2 billion of cash borrowings (net of related discount on issuance).

Senior Notes — During the six months ended June 30, 2024, we repaid $ 156 million of WMI’s 3.5 % senior notes upon maturity in May 2024.

Our effective income tax rate was 23.9 % and 21.3 % for the three and six months ended June 30, 2024, respectively, compared with 24.2 % and 23.9 % for the three and six months ended June 30, 2023, respectively.

The decrease in our effective income tax rate when comparing the three and six months ended June 30, 2024 and 2023 was primarily driven by an increase in federal tax credits;

partially offset by (i) the impacts of adopting Accounting Standards Update (“ASU”) 2023-02 and (ii) 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.

3 unchanged sentences

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.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During the three and six months ended June 30, 2024, we recognized a reduction in our income tax expense of $ 37 million and $ 74 million, respectively, due to federal tax credits expected to be realized from our RNG investments compared with $ 2 million and $ 4 million, respectively, for the comparable prior year periods.

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

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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 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 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.

As a result of adopting ASU 2023-02, we amortize our investments in these entities using the proportional amortization method.

Under the proportional amortization method, the equity investment is amortized in proportion to the income tax credits and other income tax benefits received.

The amortization expense and the income tax credits are required to be presented on a net basis in income tax expense on the Condensed Consolidated Statements of Operations.

Prior to fiscal year 2024, we accounted 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 income (losses) of unconsolidated entities, within our Condensed Consolidated Statements of Operations.

During the three and six months ended June 30, 2024, we recognized additional income tax expense of $ 37 million related to amortization under ASU 2023-02 and a reduction in our income tax expense primarily due to federal tax credits of $ 22 million and $ 50 million, respectively.

In addition, during the three and six months ended June 30, 2024, we recognized interest expense of $ 5 million and $ 11 million, respectively, associated with our investments in low-income housing properties.

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

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

During the three and six months ended June 30, 2023, we recognized $ 12 million and $ 25 million of net losses, respectively, and a reduction in our income tax expense of $ 26 million and $ 48 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 six months ended June 30, 2023, we recognized interest expense of $ 3 million and $ 7 million, respectively, associated with our investments in low-income housing properties.

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

Earnings Per Share

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

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

Three Months Ended

Six Months Ended

Number of common shares outstanding at end of period

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Refer to the Condensed Consolidated Statements of Operations for net income attributable to Waste Management, Inc.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Commitments and Contingencies

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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

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

occurrences or loss development significantly differ from such valuations and 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.

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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 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.

As of June 30, 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.

1 unchanged sentence

Environmental Matters — A significant portion of our operating costs and capital expenditures could be characterized as costs of environmental protection.

The nature of our operations, particularly with respect to the construction, operation and maintenance of our landfills, subjects us to an array of laws and regulations relating to the protection of the environment.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

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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 (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.

If we used the high ends of such ranges (where estimable), our aggregate potential liability would be approximately $ 18 million higher than the $ 208 million recorded in the Condensed Consolidated Balance Sheet as of June 30, 2024.

Our ultimate responsibility may differ materially from current estimates.

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These adjustments could be material in any given period.

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.

As of June 30, 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 were initially developed by others as a landfill disposal facility.

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.

We generally expect to receive any amounts due from other participating parties at or near the time that we make the remedial expenditures.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

other 59 NPL sites, which we do not own, are at various procedural stages under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, known as CERCLA or Superfund.

The other 59 NPL sites, which we do not own, are at various procedural stages under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, known as CERCLA or Superfund.

The majority of proceedings involving NPL sites that we do not own are based on allegations that certain of our subsidiaries (or their predecessors) transported hazardous substances to the sites, often prior to our acquisition of these subsidiaries.

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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 and IPC subsequently engaged with the EPA and provided responses to the EPA letter.

In the second quarter of 2024, the EPA provided a

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

response that, while the parties had not remedied all concerns from its letter, the parties had sufficiently demonstrated a path forward and were given additional time to submit a full remedial design.

As of June 30, 2024 and December 31, 2023, the recorded liability for MIMC’s estimated potential share of costs for the remedy was approximately $ 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.

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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,

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:

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:

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

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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.

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.

The case is currently in the discovery phase, and 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.

WMI’s charter and bylaws provide that WMI shall indemnify against all liabilities and expenses, and upon request shall advance expenses to any person, who is subject to a pending or threatened proceeding because such person is or was a director or officer of the Company.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

a director or officer of the Company.

Such indemnification is required to the maximum extent permitted under Delaware law.

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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)

annual tax return.

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.

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

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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 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.

As of June 30, 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.

In addition, we are in the examination phase of IRS audits for the 2023 and 2024 tax years and expect the audits to be completed within the next 18 months.

We are also currently undergoing audits by the Canada Revenue Agency for the 2021 tax year and 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.

Segment and Related Information

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(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.

Our East and West Tier, along with Other 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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

Operations(b)

Three Months Ended June 30:

Collection and Disposal:

10 unchanged sentences

Corporate and Other

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Operations(b)

Six Months Ended June 30:

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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

Three Months Ended June 30:

Other collection

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Corporate and Other

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Six Months Ended June 30:

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

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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During the six months ended June 30, 2024, we completed solid waste and recycling acquisitions primarily in Florida, North Carolina, and Arizona with total consideration of $ 240 million, which included $ 234 million in cash paid and $ 6 million of other consideration, specifically purchase price holdbacks.

In addition, we paid $ 16 million of holdbacks, primarily related to prior year acquisitions.

Total consideration for our 2024 acquisitions was primarily allocated to $ 57 million of property and equipment, $ 57 million of other intangible assets, primarily customer relationships, and $ 127 million of goodwill.

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.

Pending Acquisition of Stericycle

On June 3, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) to acquire all outstanding shares of Stericycle for $ 62.00 per share in cash, representing a total enterprise value of approximately $ 7.2 billion when including approximately $ 1.4 billion of Stericycle’s net debt.

Stericycle is a U.S.

based leading provider of compliance-based solutions for regulated waste, including medical waste, and secure information destruction.

Stericycle serves customers in North America and Europe.

We expect the Stericycle acquisition to close as early as the fourth quarter of 2024, and we intend to finance the Stericycle acquisition through a combination of bank debt and proceeds from the issuance of senior notes.

Risk Factors in this Quarterly Report on Form 10-Q for information about certain risks and uncertainties related to the Stericycle acquisition.

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

(Gain) loss from divestitures, asset impairments and unusual items, net for the three and six months ended June 30, 2024 primarily relates to a $ 54 million charge required to increase the estimated fair value of a liability associated with the expected disposition of an investment the Company holds in a waste diversion technology business.

This charge is reflected in our Corporate and Other measures within our segment reporting.

(Gain) loss from divestitures, asset impairments and unusual items, net for the three and six months ended June 30, 2023 were not material.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accumulated Other Comprehensive (Loss) Income

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Net current period other comprehensive income (loss)

Balance, March 31, 2024

Balance, June 30, 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.

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

In February 2024, we repurchased 0.2 million shares of our common stock through an October 2023 Accelerated Share Repurchase (“ASR”) agreement that completed in February 2024, based on a final weighted average price of $ 175.29 .

Also in February 2024, we entered into an 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 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.

In the second quarter of 2024 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 $ 12 million, inclusive of per-share commissions, at a weighted average price of $ 209.20 .

As of June 30, 2024, the Company has authorization for $ 1,238 million of future share repurchases.

As a result of the planned Stericycle acquisition discussed in Note 8, the Company previously announced that it has temporarily suspended share repurchases.

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

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair Value Measurements

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Equity securities

Debt securities (a)

Significant other observable inputs (Level 2):

Available-for-sale securities (a)

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

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Available-for-sale securities (b)

(a) Includes $ 778 million of investments in certain WM tax-exempt bonds as discussed further in Note 1.

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

See Note 9 for information related to our nonrecurring fair value measurements.

Fair Value of Debt

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.

As of June 30, 2024 and December 31, 2023, the carrying value of our debt was $ 16.7 billion and $ 16.2 billion, respectively.

The estimated fair value of our debt was approximately $ 15.6 billion as of June 30, 2024 and December 31, 2023.

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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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 March 31, 2024 and December 31, 2023.

The fair value estimates are based on Level 2 inputs of the fair value hierarchy available as of June 30, 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.

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We do not consolidate our investments in entities established to manage low-income housing properties because we are not the primary beneficiary of these entities as we do not have the power to individually direct the activities of these entities.

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

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.

Our aggregate investment balance in these entities was $ 400 million and $ 458 million as of June 30, 2024 and December 31, 2023, respectively.

The debt balance related to our investments in low-income housing properties was $ 383 million and $ 408 million as of June 30, 2024 and December 31, 2023, respectively.

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

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Trust Funds for Final Capping, Closure, Post-Closure or Environmental Remediation Obligations

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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 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.

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 $ 107 million and $ 104 million as of June 30, 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.

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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 $ 120 million and $ 119 million as of March 31, 2024 and December 31, 2023, respectively.

These trusts had a fair value of $ 121 million and $ 119 million as of June 30, 2024 and December 31, 2023, respectively.

Subsequent Events

Senior Notes Issuance

In July 2024, WMI issued $ 750 million of 4.950 % senior notes due 2027 and $ 750 million of 4.950 % senior notes due 2031, the net proceeds of which were $ 1.5 billion.

The net proceeds were used primarily to reduce outstanding borrowings under our commercial paper program.

On July 15, 2024, we completed the acquisition of Winters Bros.

Waste Systems, a large regional waste and recycling company based in Long Island, New York with total purchase price of $ 550 million.

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