What changed in this filing

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Item 1. Financial Statements

2024-10-28 compared with 2024-07-25 · 162 added, 147 removed, 472 unchanged (40% of the section changed)

3 unchanged sentences

(In Millions, Except Share and Par Value Amounts)

September 30,

Current assets:

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating revenues

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Consolidated net income

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(In Millions)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

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(Loss) Income

Three Months Ended June 30:

Balance, March 31, 2024

Three Months Ended September 30:

Balance, June 30, 2024

Consolidated net income

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Equity-based compensation transactions, net

Common stock repurchase program

Adoption of new accounting standard

Balance, September 30, 2024

Balance, June 30, 2023

Balance, March 31, 2023

Consolidated net income

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Common stock repurchase program

Balance, June 30, 2023

Balance, September 30, 2023

See Notes to Condensed Consolidated Financial Statements.

8 unchanged sentences

(Loss) Income

Six Months Ended June 30:

Nine Months Ended September 30:

Balance, December 31, 2023

5 unchanged sentences

Adoption of new accounting standard

Balance, June 30, 2024

Balance, September 30, 2024

Balance, December 31, 2022

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Common stock repurchase program

Balance, June 30, 2023

Balance, September 30, 2023

See Notes to Condensed Consolidated Financial Statements.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

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Refer to Note 7 for further discussion.

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.

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

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

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

These advanced billings are included in deferred revenues and recognized as

revenue in the period service is provided.

Substantially all our deferred revenues during the reported periods are realized as revenues within one to three months , when the related services are performed.

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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 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.

As of September 30, 2024 and December 31, 2023, we had $ 216 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.

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

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

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

June 30, 2024

September 30, 2024

December 31, 2023

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Current (in accrued liabilities)

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

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

Environmental

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Acquisitions, divestitures and other adjustments

June 30, 2024

September 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.

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See Note 13 for additional information related to these trusts.

WASTE MANAGEMENT, INC.

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 June 30, 2024:

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)

Debt and Derivatives

September 30,

Commercial paper program (weighted average interest rate of 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 3.9 % as of September 30, 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 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)

Tax-exempt bonds, maturing through 2053, fixed and variable interest rates ranging from 0.70 % to 5.0 % (weighted average interest rate of 3.7 % as of September 30, 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 September 30, 2024 and 5.0 % as of December 31, 2023) (a)

Debt issuance costs, discounts and other

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Debt Classification

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) $ 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.

As of September 30, 2024, we had approximately $ 1.9 billion of debt maturing within the next 12 months, including (i) $ 1.2 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities;

(ii) $ 422 million of 3.125 % senior notes that mature in March 2025 and (iii) $ 254 million of other debt with scheduled maturities within the next 12 months, including $ 110 million of tax-exempt bonds.

As of September 30, 2024, we have classified $ 1.2 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”).

The remaining $ 676 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

Term Credit Agreement Up to $ 7.2 Billion — On August 28, 2024, the Company entered into a delayed draw Term Credit Agreement in a principal amount of up to $7.2 billion (the “Term Credit Agreement”).

Borrowings under our Term Credit Agreement may be used to pay all or a portion of the consideration for our pending acquisition of Stericycle;

to pay, prepay or otherwise refinance certain indebtedness of Stericycle;

and/or to pay fees and expenses incurred in connection with the acquisition and the Term Credit Agreement.

The maturity date of borrowings under the Term Credit Agreement shall be the first business day that is 364 days after the date that borrowings are received (the “Funding Date”).

WM Holdings, a wholly-owned subsidiary of WMI, guarantees all of the obligations under the Term Credit Agreement.

Borrowings under the Term Credit Agreement will bear interest at a base rate or the secured overnight financing rate (“SOFR”) administered by the Federal Reserve Bank of New York, plus an applicable 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 can range from 0.90 % to 1.250 % per annum and the spread for base rate loans can range from zero to 0.250 % per annum.

We also pay certain other fees set forth in the Term Credit Agreement, including (a) a ticking fee accruing on the aggregate lending commitments from August 28, 2024 to the earlier of the Funding Date or the termination or expiration of the lending commitments under the Term Credit Agreement;

(b) extension fees on the aggregate lending commitments in effect on June 3, 2025 and December 31, 2025;

and (c) duration fees on the aggregate principal amount of borrowings outstanding on December 31, 2024, December 31, 2025 and at the end of each fiscal quarter.

As of September 30, 2024, there were no outstanding borrowings under our Term Credit Agreement and the ticking fee in effect was 0.065 % per annum.

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

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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.

WM Holdings 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.

or Canadian loans are based on SOFR 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.

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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.

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

We had $ 171 million of letters of credit issued and no outstanding borrowings under our commercial paper program, both supported by the facility, leaving unused and available credit capacity of $ 3.3 billion as of September 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.

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

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.

As of September 30, 2024, we had no outstanding borrowings under our commercial paper program.

Other Letter of Credit Lines — As of September 30, 2024, we had utilized $ 863 million of other uncommitted letter of credit lines with terms maturing through December 2027.

Debt Borrowings and Repayments

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.

Commercial Paper Program — During the nine months ended September 30, 2024, we made cash repayments of $ 10.3 billion, which were partially offset by $ 9.4 billion of cash borrowings (net of related discount on issuance).

Senior Notes — During the nine months ended September 30, 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.

During the nine months ended September 30, 2024, we repaid $ 156 million of WMI’s 3.5 % senior notes upon maturity in May 2024.

Treasury Locks — We use treasury lock agreements to hedge our exposure to interest rate changes and to reduce the volatility of financing costs on expected future debt issuances.

Each of our treasury lock transactions was designated as a cash flow hedge of the interest payments associated with an anticipated debt issuance.

During the third quarter of 2024, we entered into treasury lock transactions to fix the ten-year treasury rate on an aggregate notional amount of $ 900 million.

We also entered into treasury lock transactions to fix the thirty-year treasury rate on an aggregate notional amount of $ 650 million.

As of September 30, 2024, we recognized an unrealized loss of $ 35 million within accumulated other comprehensive (loss) income and an associated derivative liability reflected within accrued liabilities on the Company’s Condensed Consolidated Balance Sheets related to these cash flow hedges.

Upon termination, these derivatives will be amortized to earnings as a component of interest expense over the full term of each issuance.

Our effective income tax rate was 23.6 % and 22.2 % for the three and nine months ended September 30, 2024, respectively, compared with 24.1 % and 24.0 % for the three and nine months ended September 30, 2023, respectively.

The decrease in our effective income tax rate when comparing the three and nine months ended September 30, 2024 and 2023 was primarily driven by (i) an increase in federal tax credits and (ii) the reduction in the state and local income tax rate partially offset by impacts of adopting Accounting Standards Update (“ASU”) 2023-02, which is discussed further below.

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

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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.

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.

During the three and nine months ended September 30, 2024, we recognized a reduction in our income tax expense of $ 37 million and $ 111 million, respectively, due to federal tax credits expected to be realized from our RNG investments compared with $ 2 million and $ 6 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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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.

During the three and nine months ended September 30, 2024, we recognized additional income tax expense of $ 19 million and $ 56 million, respectively, related to amortization under ASU 2023-02 and a reduction in our income tax expense primarily due to federal tax credits of $ 26 million and $ 76 million, respectively.

In addition, during the three and nine months ended September 30, 2024, we recognized interest expense of $ 5 million and $ 16 million, respectively, associated with our investments in low-income housing properties.

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

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.

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.

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

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

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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These facilities are discussed further in Note 3.

Surety bonds and insurance policies are supported by (i) a diverse group of third-party surety and insurance companies;

Surety bonds and insurance policies are supported by (i) a diverse group of third-party

surety and insurance companies;

(ii) an entity in which we have a noncontrolling financial interest or (iii) a wholly-owned insurance captive, the sole business of which is to issue surety bonds and/or insurance policies on our behalf.

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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 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.

As of September 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.

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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

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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Determining the method and ultimate cost of remediation requires that a number of assumptions be made.

There can sometimes be a range of reasonable estimates of the costs associated with the likely site remediation alternatives identified in the environmental impact investigation.

There can sometimes be a range of reasonable estimates of the costs associated with the likely site remediation alternatives identified

in the environmental impact investigation.

In these cases, we use the amount within the range that is our best estimate.

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 $ 208 million recorded in the Condensed Consolidated Balance Sheet as of June 30, 2024.

If we used the high ends of such ranges (where estimable), our aggregate potential liability would be approximately $ 17 million higher than the $ 202 million recorded in the Condensed Consolidated Balance Sheet as of September 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 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.

As of September 30, 2024, we had been notified by the government that we are a PRP in connection with 74 locations listed on the Environmental Protection Agency’s (“EPA’s”) Superfund National Priorities List, or NPL.

Of the 74 sites at which claims have been made against us, 14 are sites we own.

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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.

The EPA responded 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, which was submitted during the third quarter of 2024.

In late October 2024, the EPA provided comments in response to the full remedial design submission and the parties are currently reviewing those comments.

As of September 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.

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.

In accordance with this SEC regulation, the Company uses a threshold of $ 1 million for purposes of determining whether disclosure of any such environmental proceedings is required.

In accordance with this SEC regulation, the Company uses a threshold of $ 1 million for purposes of determining

whether disclosure of any such environmental proceedings is required.

As of the date of this filing, we are not aware of any matters that are required to be disclosed pursuant to this standard.

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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

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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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.

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.

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

continuing to represent them.

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

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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 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.

As of September 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.

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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)

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

Operations(b)

Three Months Ended June 30:

Three Months Ended September 30:

Collection and Disposal:

Other Ancillary

Collection and Disposal

Recycling Processing and Sales

WM Renewable Energy

Collection and Disposal (c)(d)

Recycling Processing and Sales (c)

WM Renewable Energy (d)

Corporate and Other

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Other Ancillary

Collection and Disposal

Recycling Processing and Sales

WM Renewable Energy

Collection and Disposal (c)(d)

Recycling Processing and Sales (c)

WM Renewable Energy (d)

Corporate and Other

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Operations(b)

Six Months Ended June 30:

Nine Months Ended September 30:

Collection and Disposal:

Other Ancillary

Collection and Disposal

Recycling Processing and Sales

WM Renewable Energy

Collection and Disposal (c)(d)

Recycling Processing and Sales (c)

WM Renewable Energy (d)

Corporate and Other

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Other Ancillary

Collection and Disposal

Recycling Processing and Sales

WM Renewable Energy

Collection and Disposal (c)(d)

Recycling Processing and Sales (c)

WM Renewable Energy (d)

Corporate and Other

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(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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(c) Certain fees related to the processing of recycled material we collect are included within our Collection and Disposal businesses.

The amounts in income from operations for the three and nine months ended September 30, 2024, are $ 29 million and $ 77 million, respectively.

The amounts in income from operations for three and nine months ended September 30, 2023, are $ 16 million and $ 41 million, respectively.

(d) WM Renewable Energy pays a 15 % intercompany royalty to our Collection and Disposal businesses for landfill gas.

The total amount of royalties in income from operations for the three and nine months ended September 30, 2024, are $ 13 million and $ 34 million, respectively.

The total amount of royalties in income from operations for the three and nine months ended September 30, 2023, are $ 10 million and $ 30 million, respectively .

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

Three Months Ended June 30:

Three Months Ended September 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:

Nine Months Ended September 30:

Other collection

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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.

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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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.

WASTE MANAGEMENT, INC.

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.

During the nine months ended September 30, 2024, we completed solid waste and recycling acquisitions primarily in New York, Florida, North Carolina, and Arizona with total consideration of $ 780 million, which included $ 774 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 $ 160 million of property and equipment, $ 78 million of other intangible assets, primarily customer relationships, and $ 581 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.

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

Pending Acquisition of Stericycle

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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.

We expect the Stericycle acquisition to close in the fourth quarter of 2024, and we intend to finance the Stericycle acquisition through a combination of bank debt, commercial paper and/or issuance of senior notes.

(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.

(Gain) loss from divestitures, asset impairments and unusual items, net for the three months ended September 30, 2024 primarily relates to a $ 14 million loss associated with the divestiture of a minority investment in a medical waste company within Corporate and Other, in connection with our pending acquisition of Stericycle.

The nine months ended September 30, 2024 include 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 recorded during the second quarter of 2024.

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)

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

Accumulated Other Comprehensive (Loss) Income

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Net current period other comprehensive income (loss)

Balance, June 30, 2024

Balance, September 30, 2024

Common Stock Repurchase Program

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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.

There were no common stock repurchases during the third quarter of 2024.

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

As a result of the pending 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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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):

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Equity securities

Debt securities (a)

Significant other observable inputs (Level 2):

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 .

Available-for-sale securities (a)

Total assets measured at fair value

Significant other observable inputs (Level 2):

Interest rate derivatives

Total liabilities measured at fair value

(a) 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 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.

As of September 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 $ 16.3 billion as of September 30, 2024 and $ 15.6 billion as of December 31, 2023.

of fair value.

Accordingly, our estimates are not necessarily indicative of the amounts that we, or holders of the instruments, could realize in a current market exchange.

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 June 30, 2024 and December 31, 2023.

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

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.

Our aggregate investment balance in these entities was $ 381 million and $ 458 million as of September 30, 2024 and December 31, 2023, respectively.

The debt balance related to our investments in low-income housing properties was $ 373 million and $ 408 million as of September 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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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.

Our investments and receivables related to these trusts had an aggregate carrying value of $ 112 million and $ 104 million as of September 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.

These trust funds are recorded in restricted funds in our Condensed Consolidated Balance Sheets.

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 $ 121 million and $ 119 million as of June 30, 2024 and December 31, 2023, respectively.

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

These trusts had a fair value of $ 124 million and $ 119 million as of September 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.

Stericycle Exchange Offer and Consent Solicitation

On September 10, 2024, we announced that, in connection with the acquisition of Stericycle, we commenced a private exchange offer (the “Exchange Offer”) and related consent solicitation on behalf of Stericycle (the “Consent Solicitation”) with respect to the outstanding 3.875 % Senior Notes due 2029 issued by Stericycle (the “SRCL Notes”).

The Exchange Offer and the Consent Solicitation are being made upon the terms and conditions set forth in an exchange offer memorandum and consent solicitation statement dated September 10, 2024 (the “Offering Memorandum”).

Pursuant to the Exchange Offer, we are offering to issue new notes (the “WM Notes”) in exchange for any and all of the $ 500 million aggregate principal amount of the SRCL Notes held by holders eligible to participate in the Exchange Offer (“Eligible Holders”).

The WM Notes will have the same interest rate, interest payment dates and maturity date as the exchanged SRCL notes but will differ in certain respects from the SRCL Notes, including the redemption provisions, as described in the Offering Memorandum.

In addition, pursuant to the Consent Solicitation, we solicited on behalf of

Stericycle and, as of September 23, 2024, we received consents from the Eligible Holders to amend the SRCL Notes and the related indenture under which they were issued to eliminate substantially all of the restrictive covenants, restrictive provisions and events of default, other than payment-related, guarantee-related and bankruptcy-related events of default (the “Proposed Amendments”).

The Exchange Offer and Consent Solicitation are being made solely pursuant to the conditions set forth in the Offering Memorandum in a private offering exempt from, or not subject to, registration under the Securities Act of 1933, as amended, and are conditioned upon, among other things, the consummation of the acquisition of Stericycle.

As of September 23, 2024 (the “Early Tender Date”), $ 474,581,000 in aggregate principal amount of SRCL Notes, representing approximately 94.92 % of the aggregate principal amount of SRCL Notes outstanding, had been validly tendered and not validly withdrawn.

As a result, we have received the requisite number of consents to adopt the Proposed Amendments.

Eligible Holders of SRCL Notes validly tendered and not validly withdrawn by the Early Tender Date, and accepted for exchange, will receive at settlement an equal principal amount of WM Notes and cash consideration of approximately $ 2.63 per $1,000 principal amount of SRCL Notes.

On October 8, 2024, we issued a press release extending the expiration date of the Exchange Offer and Consent Solicitation (the “Expiration Date”) from October 8, 2024 to October 31, 2024, which may be further extended by us in our sole discretion.

As of October 8, 2024, $ 485,255,000 in aggregate principal amount of SRCL Notes representing approximately 97.05 % of the aggregate principal amount of SRCL Notes outstanding, had been validly tendered and not validly withdrawn.

Eligible Holders of SRCL Notes validly tendered and not validly withdrawn after the Early Tender Deadline but on or prior to the Expiration Date, and accepted for exchange, will receive at settlement $ 970 principal amount of WM Notes per $ 1,000 principal amount of SRCL Notes and no cash consideration.

We expect to settle the Exchange Offer on or about the third business day after the Expiration Date, as such date may be further extended.

Pending Acquisition of Stericycle and Related Financing

We currently expect to draw $ 5.2 billion principal amount of borrowings under the Term Credit Agreement to finance the majority of the Stericycle acquisition consideration.

On October 28, 2024, we entered into a first amendment to the Term Credit Agreement to simplify logistics and permit such borrowings in advance of closing the acquisition.

All conditions to closing the Stericycle acquisition with respect to antitrust and foreign direct investment laws have now been satisfied, with the exception of only the final clearance from the Competition Bureau of Canada pursuant to the Canadian Competition Act.

This final clearance, funding of the borrowings under the Term Credit Agreement and the closing of the Stericycle acquisition are expected to occur in the fourth quarter of 2024.

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