What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-19 compared with 2024-02-13 · 267 added, 247 removed, 519 unchanged (50% of the section changed)

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The following discussion should be read considering those disclosures and together with the Consolidated Financial Statements and the notes thereto.

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

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

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

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

Through our subsidiaries, including our Waste Management Renewable Energy (“WM Renewable Energy”) business, we are also a leading developer, operator and owner of landfill gas-to-energy facilities in the U.S.

and Canada that produce renewable electricity and renewable natural gas, which is a significant source

of fuel that we allocate to our natural gas fleet.

Through our subsidiaries, including our Waste Management Renewable Energy (“WM Renewable Energy”) segment, we are also a leading developer, operator and owner of landfill gas-to-energy facilities in the U.S.

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

Additionally, we are a leading recycler in the U.S.

and Canada, handling materials that include paper, cardboard, glass, plastic and metal.

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

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

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

Stericycle Acquisition

On November 4, 2024, we completed our acquisition of all outstanding shares of Stericycle for $62.00 per share in cash, pursuant to an Agreement and Plan of Merger dated June 3, 2024.

Total enterprise value of the acquisition was $7.2 billion (net of cash acquired) when including the assumption of $0.5 billion of debt and the repayment of approximately $0.8 billion of net debt.

The acquisition expands our offerings in the U.S., Canada and parts of Western Europe.

The post-closing operating results of Stericycle have been included in our Consolidated Financial Statements, as a new reportable segment referred to as WM Healthcare Solutions.

For the year ended December 31, 2024, we incurred approximately $160 million of acquisition and integration related costs, which are primarily classified as “Selling, general and administrative expenses.” Refer to Note 19 for more information on the performance of our WM Healthcare Solutions segment.

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

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

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

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

(iii) Recycling Processing and Sales;

(iv) WM Renewable Energy and (v) WM Healthcare Solutions.

Our East and West Tiers along with certain ancillary services (“Other Ancillary”) that are 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 five reportable segments, which are presented as Corporate and Other.

Collection and Disposal

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

Additionally, we provide certain ancillary services (“Other Ancillary”) that are not managed through the Tier segments but that support our collection and disposal operations.

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

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

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Included within our Collection and Disposal businesses are landfills having (i) 20 third-party power generating facilities converting our landfill gas to fuel electricity generators;

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

(ii) 16 third-party renewable natural gas (“RNG”) facilities processing landfill gas to be sold to natural gas suppliers and (iii) six third-party projects delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes.

In return for providing our landfill gas, we receive royalties from each facility, including the benefit of a 15% royalty from our WM Renewable Energy segment based on net operating revenue generated through the sale of RNG, renewable identification numbers (“RINs”), electricity and capacity, Renewable Energy Credits (“RECs”) and related environmental attributes from the 84 landfill beneficial use renewable energy projects owned by WM Renewable Energy on our active landfills, which is eliminated in consolidation.

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

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

Our Recycling Processing and Sales segment excludes the collection of recycled materials

from our residential, commercial, and industrial customers which is included within our Collection and Disposal businesses.

WM Renewable Energy

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For 23 of these projects, the gas is used at the landfill or delivered by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes.

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

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

For 11 of these projects, the landfill gas is processed to pipeline quality RNG and then sold to natural gas suppliers.

Additionally, three of these projects are on third-party landfills.

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

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

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

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

Our Collection and Disposal and Corporate and Other businesses benefit from these projects as well as 52 additional third-party landfill beneficial gas use projects in the form of royalties.

WM Healthcare Solutions

Our WM Healthcare Solutions segment includes (i) Regulated Waste and Compliance Services (“RWCS”) which provide compliance programs and collection, processing, and disposal of regulated and specialized waste, including medical, pharmaceutical and hazardous waste and (ii) Secure Information Destruction (“SID”) services, which provide for the collection of personal and confidential information for secure destruction and recycling of sorted office paper.

RWCS are provided to customers in the U.S., Canada, Ireland and the United Kingdom (“U.K.”).

SID services are provided to customers in the U.S., Belgium, Canada, France, Germany, Ireland, Luxembourg, the Netherlands and the U.K.

Our WM Healthcare Solutions customers are primarily in the following industries:

enterprise healthcare (i.e., hospitals, health systems, and national and corporate healthcare), practices and care providers (i.e., physician offices, surgery centers, veterinary clinics, nursing and long-term care facilities, dental clinics, clinics and urgent care, dialysis centers, and home health organizations), and pharmacy labs and research centers.

Our WM Healthcare Solutions businesses also provide services to airports and seaports, education institutions, funeral homes and crematories, government and military, banks and professional services, and other businesses.

While the WM Healthcare Solutions businesses manage large volumes of waste and other materials, the average volume per customer site is relatively small.

Our customers typically enter into a contract for the provision of services on a scheduled basis, including weekly, monthly or on an as-needed basis over the contract term.

Under the contract terms, the WM Healthcare Solutions businesses receive fees based on a monthly, quarterly or annual rate and/or fees based on contractual rates depending upon measures including the volume, weight, and type of waste.

Operating revenues are invoiced based on the terms of the underlying contract either on a regular basis, or as services are performed and are generally due within a short period of time after invoicing based upon normal terms and conditions for our business type and the geography of the services performed.

As of December 31, 2024, our WM Healthcare Solutions businesses include a global fleet of approximately 6,100 routed trucks, tractors, collection vans and small duty vehicles.

Our WM Healthcare Solutions segment operates out of approximately 361 leased and owned facilities worldwide with 69 autoclaves or other alternative medical waste treatment facilities, 18 medical waste incinerator facilities, 107 SID processing facilities and 167 transfer stations.

Included within our WM Healthcare Solutions segment are 35 locations that are classified as held for sale as of December 31, 2024.

Corporate and Other

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

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

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

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

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

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

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

Included in the fees we charge for our services is our energy surcharge and other charges that are intended to pass through costs to customers.

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However, customers increasingly expect more of their waste materials to be recovered and those waste streams are becoming more complex.

In addition, many state and local governments mandate diversion, recycling and waste reduction at the source and prohibit the disposal of certain types

of waste at landfills.

In addition, many state and local governments mandate diversion, recycling and waste reduction at the source and prohibit the disposal of certain types of waste at landfills.

We monitor these developments to adapt our service offerings.

As companies, individuals and communities look for ways to be more sustainable, we promote our comprehensive services that go beyond our core business of collecting and disposing of waste in order to meet their needs.

This includes expanding traditional recycling services, increasing organics collection and processing, and expanding our renewable energy projects to meet the evolving needs of our diverse customer base.

This includes expanding traditional recycling services, increasing organics collection and processing, providing medical waste services and expanding our renewable energy projects to meet the evolving needs of our diverse customer base.

As North America’s leading provider of comprehensive environmental solutions, we are taking big, bold steps to catalyze positive change – change that will impact our Company as well as the communities we serve.

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The Sustainability Report conveys the strong linkage between the Company’s sustainability goals and our growth strategy, inclusive of the planned and ongoing expansion of the Company’s Recycling Processing and Sales and WM Renewable Energy segments.

The information in this report can be found at https://sustainability.wm.com but it does not constitute a part of, and is not incorporated by reference into, this Annual Report on Form 10-K.

The information in this report can be found at sustainability.wm.com but it does not constitute a part of, and is not incorporated by reference into, this Annual Report on Form 10-K.

For further discussion see Item 1.

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Significant components of our operating expenses vary directly as we experience changes in revenue due to volume and inflation.

Volume changes can fluctuate significantly by line of business and volume changes in higher margin businesses can impact key financial metrics.

Volume changes

can fluctuate significantly by line of business and volume changes in higher margin businesses can impact key financial metrics.

We must dynamically manage our cost structure in response to volume changes and cost inflation.

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Advancements made through these initiatives are intended to seamlessly and digitally connect all enterprise functions required to service customers and provide the best experience.

In late 2021, we began to execute this technology enablement strategy to automate and optimize certain elements of our service delivery model.

The key benefits are to reduce labor dependency on certain high-turnover jobs, particularly in customer experience, recycling and residential collection, while further elevating our customer self-service through digitalization and implementation of technologies to enhance the safety, reliability and efficiency within our collection operations.

We have made significant progress in executing this technology enablement strategy to automate and optimize certain elements of our service delivery model.

The key benefits are reduced labor dependency on certain high-turnover jobs, particularly in customer experience, recycling and residential collection, while further elevating our customer self-service through digitalization and implementation of technologies to enhance the safety, reliability and efficiency within our collection operations.

Additionally, in 2022, we implemented a new general ledger accounting system, complementary finance enterprise resource planning system and a human capital management system, which will continue to drive operational and service excellence by empowering our people through a modern, simplified and connected employee experience.

Macroeconomic pressures, including inflation and rising interest rates, and market disruption resulting in labor, supply chain and transportation constraints have impacted our results;

however, we began to see moderate improvements during the second half of 2023.

Significant global supply chain disruption has reduced availability of certain assets used in our business, and inflation has increased costs for the goods and services we purchase, particularly for labor, repair and maintenance, and subcontractor costs.

Supply chain constraints have caused delayed delivery of fleet, steel containers and other purchases.

Aspects of our business rely on third-party transportation providers, and such services have become more limited and expensive.

With the significant decline in commodity prices that started in the second half of 2022 and has continued into 2023, we are currently experiencing margin pressures from our commodity-driven businesses, specifically within our Recycling Processing and Sales and WM Renewable Energy segments.

to protect against the down-side risk by spreading the inherent risk of changes in commodity prices across the vertically integrated value chain.

The extent and duration of the impact of labor, supply chain, transportation and commodity price challenges are subject to numerous external factors beyond our control, including broader macroeconomic conditions;

recessionary fears and/or an economic recession;

size, location, and qualifications of the labor pool;

wage and price structures;

adoption of new or revised regulations;

geopolitical conflicts and responses and supply and demand for commodities.

As we experience inflationary cost pressures, we focus on our pricing efforts, as well as operating efficiencies and cost controls, to maintain our earnings and cash flow and facilitate growth.

With these macroeconomic pressures, we remain committed to putting our people first to ensure that they are well positioned to execute our daily operations diligently and safely.

We sometimes experience margin pressures and variability in earnings and margins from our commodity-driven businesses, specifically within our Recycling Processing and Sales and WM Renewable Energy segments.

While recycling commodity prices have recovered in 2024 from the low levels experienced in 2023, commodity prices are still below levels seen at the beginning of 2022.

The impacts of commodity price fluctuations are not currently material to our WM Renewable Energy segment;

however, as we continue to make investments to grow that segment, we may experience more significant impacts from fluctuations in the prices of electricity, natural gas, RINs and RECs.

We continue to take proactive steps to adjust our business models to protect against the down-side risk of changes in commodity prices.

Variability in economic conditions, including inflation, interest rates, employment trends and supply chain reliability, can create risk and uncertainty in financial outlook.

We take proactive steps to recover and mitigate inflationary cost pressures through our overall pricing efforts and by managing our costs through efficiency, labor productivity, and investments in technology to automate certain aspects of our business.

We remain committed to putting our people first to ensure that they are well positioned to execute our daily operations diligently and safely.

We remain focused on delivering outstanding customer service, managing our variable costs with changing volumes and investing in technology that will enhance our customers’ experience and provide operating efficiencies intended to reduce our cost to serve.

Current Year Financial Results

During 2023, we continued to focus on our priorities to advance our strategy—enhancing employee engagement, permanently reducing our cost to serve through the use of technology and automation, and investing in growth through our Recycling Processing and Sales and WM Renewable Energy segments.

This strategic focus, combined with strong operational execution, resulted in increased revenue, income from operations and income from operations margin.

We remain diligent in offering a competitive and differentiated service that meets the needs of our customers, and we are focused on driving operating efficiencies and reducing discretionary spend.

We continue to invest in our people through paying a competitive market wage, investments in our digital platform and training for our team members.

During 2024, we continued to focus on our priorities to advance our strategy—enhancing employee engagement, reducing our cost to serve through the use of technology and automation, and investing in growth through acquisitions and our Recycling Processing and Sales and WM Renewable Energy segments.

We invested approximately $8 billion, with $7.5 billion funded in cash and $0.5 billion as the assumption of debt, on acquisitions in 2024, including having completed our acquisition of Stericycle in early November.

We remain diligent in offering competitive and differentiated services that meet the needs of our customers, and we are focused on driving operating efficiencies and reducing discretionary spend.

We continue to invest in our people through paying a competitive market wage, investing in our digital platform and providing training for our team members.

We also continue to make investments in automation and optimization to enhance our operational efficiency and improve labor productivity for all lines of business.

This strategic focus, combined with strong operational execution, resulted in increased revenue, income from operations and income from operations margin in 2024 when compared to the prior year.

During 2024, the Company allocated $3,231 million of available cash to capital expenditures.

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The increase is primarily attributable to (i) higher yield in our Collection and Disposal businesses;

(ii) acquisitions, net of divestitures and (iii) increased volumes.

These increases were partially offset by commodity price declines in our Recycling Processing and Sales and WM Renewable Energy segments and decreased revenue from our energy surcharge program as a result of a decline in the price of fuel, particularly diesel;

(ii) acquisitions, net of divestitures;

(iii) increases in commodity prices in our Recycling and Sales and WM Renewable Energy segments and (iv) increased volumes.

These increases were partially offset by a decrease in revenue from our energy surcharge program as a result of a decline in the price of fuel, particularly diesel;

● Operating expenses of $13,383 million in 2024, or 60.7% of revenues, compared with $12,606 million, or 61.7% of revenues, in 2023.

The $312 million increase is primarily attributable to (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor costs and (ii) labor cost pressure from wage increases.

These increases were offset, in part, by commodity driven business impacts from lower recycling rebates reflected in costs of goods sold and lower fuel prices;

As a percentage of revenue, operating expenses improved significantly compared to the prior year as revenue growth from price, efficiency gains, improved employee retention and momentum in truck deliveries offset the impacts of inflationary increases in wages and other expenses.

The increase in total operating expenses from prior year related primarily to (i) acquisitions;

(ii) inflationary pressure on wages and expenses;

(iii) higher recycling customer rebates resulting from an approximate 50% increase in single-stream recycling commodity prices;

(iv) volume growth within our WMSBS business which relies more extensively on subcontracted hauling and services than our Collection and Disposal businesses;

(v) increases in landfill operating costs, particularly for higher leachate costs due to wet weather and (vi) higher risk management spend, due in part, to increases in certain large loss claims reserves.

These increases were partially offset by lower diesel fuel prices and an increase in gains on the sale of non-strategic assets in 2024 as compared with the prior year;

● Selling, general and administrative expenses of $2,264 million in 2024, or 10.3% of revenues, compared with $1,926 million, or 9.4% of revenues, in 2023.

The $12 million decrease was primarily due to (i) reduced professional fees in connection with investments in our digital platform, as certain digital projects have moved from higher cost development activities to implementation activities and (ii) lower annual incentive compensation costs;

The $338 million increase was primarily due to (i) costs incurred in connection with the acquisition and integration of Stericycle of which a significant portion were transaction and integration costs that are not expected to recur;

(ii) increased labor costs from higher annual and long-term incentive compensation costs and annual wage increases and (iii) increased professional fees to support strategic initiatives.

Partially offsetting these increases was a decline in litigation costs;

● Income from operations of $4,063 million, or 18.4% of revenues, in 2024 compared with $3,575 million, or 17.5% of revenues, in 2023.

The increase in the current year earnings was primarily driven by revenue growth within our Collection and Disposal businesses partially offset by (i) impairments within our Recycling Processing and Sales segment as well as certain investments in our Corporate and Other operations;

(ii) lower market values for RINs and (iii) the decline in recycling commodity prices affecting profitability in our Recycling Processing and Sales segment;

The increase in the current year earnings was primarily driven by (i) revenue growth and improved performance within our Collection and Disposal businesses;

(ii) impairments incurred in 2023 and (iii) higher RIN quantities generated and sold at higher market values in the current year;

● Net income attributable to Waste Management, Inc.

was $2,746 million, or $6.81 per diluted share, compared with $2,304 million, or $5.66 per diluted share, in 2023.

The increase in income from operations discussed above was partially offset by higher interest and income tax expense;

The $442 million increase is due to an increase in income from operations discussed above, as well as lower income tax expense driven by benefits generated from our low-income housing investments and federal tax credits realized from our RNG investments.

These increases were partially offset by higher interest expense;

● Net cash provided by operating activities was $5,390 million in 2024, compared with $4,719 million in 2023.

The increase in net cash provided by operating activities was driven by higher earnings attributable to our Collection and Disposal businesses and lower income tax payments.

This increase was partially offset by (i) unfavorable changes in working capital, net of effects of acquisitions and divestitures;

(ii) higher interest payments and (iii) higher incentive compensation payments during 2023;

The $671 million increase in net cash provided by operating activities was primarily driven by (i) higher earnings in our Collection and Disposal businesses;

(ii) favorable changes in working capital, net of effects of acquisitions and divestitures and (iii) lower annual incentive compensation payments.

This increase was partially offset by higher cash interest payments and income tax payments;

● Free cash flow was $2,317 million in 2024, compared with $1,902 million in 2023.

The decrease in free cash flow is primarily attributable to the increase in capital spending, primarily driven by our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments and higher capital asset purchases in the current year to support our Collection and Disposal businesses.

The decrease was partially offset by the increase in net cash provided by operating activities discussed above and higher proceeds from divestitures of businesses and other assets.

The $415 million increase in free cash flow was primarily due to the increases in operating cash described above and increase in proceeds from the divestiture of non-strategic assets and businesses.

These increases were partially offset by an increase in capital spending, which was driven by our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments and higher capital asset purchases in the current year to support our Collection and Disposal businesses.

Free cash flow is a non-GAAP measure of liquidity.

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Operating Revenues

The mix of operating revenues for the year ended December 31 are as follows (in millions):

The mix of operating revenues for the years ended December 31 are as follows (in millions):

Revenues(a)(b)

Year Ended December 31:

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WM Renewable Energy

WM Healthcare Solutions

Corporate and Other

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

(b) In the fourth quarter of 2024, the Company adjusted gross and intercompany operating revenues to reflect the 15% royalty paid by WM Renewable Energy to Collection and Disposal and Corporate and Other businesses for the purchase of landfill gas.

There was no change to net operating revenues.

Prior periods were recast to conform to current year presentation.

The following table provides details associated with the period-to-period change in revenues and average yield for the year ended December 31 (dollars in millions):

Collection and disposal

Recycling Processing and Sales and WM Renewable Energy (c)(d)

Energy surcharge and mandated fees (d)(e)

Total average yield (f)

Recycling Processing and Sales and WM Renewable Energy (c)

Energy surcharge and mandated fees

Total average yield (d)

Internal revenue growth

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(c) Includes combined impact of commodity price variability in both our Recycling Processing and Sales and WM Renewable Energy segments, as well as changes in certain recycling fees charged by our collection and disposal operations.

(d) Beginning in 2023, the results include changes in our revenue attributable to our WM Renewable Energy segment.

Previously these changes in revenue were included in energy surcharges and mandated fees.

We have revised our prior year results to conform with the current year presentation.

(e) Our energy surcharge was revised in the second quarter of 2023 to incorporate market prices for both diesel and compressed natural gas (“CNG”).

(f) The amounts reported herein represent the changes in our revenue attributable to average yield for the total Company.

(g) Includes activities from our Corporate and Other businesses.

(d) The amounts reported herein represent the changes in our revenue attributable to average yield for the total Company.

(e) Includes activities from our Corporate and Other businesses.

The following provides further details about our period-to-period change in revenues:

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We are continuing to see growth in our landfill business with our municipal solid waste experiencing average yield of 3.1% in 2024.

Recycling Processing and Sales and WM Renewable Energy — Recycling Processing and Sales revenues attributable to yield decreased $308 million in 2023 and increased $19 million in 2022, respectively, as compared with the prior year periods.

While still below prices seen at the beginning of 2022, recycling commodity prices began to improve in the fourth quarter of 2023 and while there may be short-term fluctuations in our commodity-driven businesses as prices change, we continue to focus on adjusting our business models to protect against the down-side risk by spreading the inherent risk of changes in commodity prices across the vertically integrated value chain.

Average market prices for single-stream recycled commodities were down 40% and 10% in 2023 and 2022, respectively, as compared with the prior year periods.

Recycling Processing and Sales and WM Renewable Energy — Recycling Processing and Sales revenues attributable to yield increased $245 million in 2024 and decreased $308 million in 2023, respectively, as compared with the prior year periods.

Average market prices for single-stream recycled commodities increased approximately 50% in 2024 and decreased 40% in 2023 as compared with the prior year period.

During 2023, the revenue decline from lower commodity pricing that started in 2022 was partially offset by higher pricing in our recycling brokerage business as well as our continued focus on a fee-based pricing model.

Additionally, revenue in our WM Renewable Energy segment decreased $73 million and increased $48 million in 2023 and 2022, respectively, as compared with the prior year periods, primarily driven by the fluctuations in energy prices and the value of RINs.

Energy Surcharge and Mandated Fees — These fees decreased $104 million in 2023 and increased $426 million in 2022, as compared with the prior year periods.

Additionally, revenue in our WM Renewable Energy segment increased $26 million in 2024 and decreased $73 million in 2023 as compared with the prior year periods, primarily driven by fluctuations in energy prices and the value and quantity of RINs.

While there may be short-term fluctuations in our commodity-driven businesses as prices change, we believe that our business models and processes appropriately mitigate the downside risk of changes in commodity prices.

Energy Surcharge and Mandated Fees — These fees decreased $97 million and $104 million in 2024 and 2023, respectively, as compared to the prior year periods.

Beginning in the second quarter of 2023, our energy surcharge was revised to incorporate market prices for both diesel and CNG.

The decrease in energy surcharge revenues in 2023 is primarily due to a decline of approximately 15% in market prices for diesel fuel as compared to the prior year period.

The increase in energy surcharge revenues in 2022 was driven by a 50% increase in diesel fuel in 2022, as compared with the prior year period.

The decrease in energy surcharge revenues is primarily due to a decline in market prices for diesel fuel of approximately 10% in 2024 and 15% in 2023 as compared to the prior year periods.

The mandated fees are primarily related to fees and taxes assessed by various state, county and municipal government agencies at our landfills and transfer stations.

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Our revenues from volume (excluding volumes from acquisitions and divestitures) increased $88 million, or 0.4%, and $150 million, or 0.8%, in 2024 and 2023, respectively, as compared with the prior year periods.

Our Collection and Disposal businesses volume grew 0.7% and 1.8% in 2023 and 2022, respectively.

Our 2023 volume growth has moderated when compared to 2022.

Special waste volumes at our landfills continue to be a significant driver, primarily due to an increase in event-driven projects.

In addition, we saw an increase in our WMSBS volumes.

These increases were partially offset by a decrease in temporary industrial collection volumes and the intentional shedding of low-margin residential collection business.

Although our 2024 volume growth has moderated when compared to 2023, special waste and municipal solid waste tons at our landfills continue to be a significant driver of our growth.

Additionally, in 2024 we saw an increase in volumes in our WMSBS business due to our continued focus on a differentiated service model for national accounts customers and our recycling activity, renewable energy projects and commercial collection business contributed to our overall volume growth.

These increases were partially offset by a decrease in industrial collection volumes and the intentional shedding of low-margin residential collection business.

Furthermore, our construction and demolition landfill volumes for the year ended December 31, 2024, declined as compared to prior year due to clean-up efforts in our East Tier from Hurricane Ian in 2023.

Acquisitions and Divestitures

Acquisitions and divestitures, primarily in our Collection and Disposal businesses, resulted in a net increase in revenues of $181 million, or 0.9%, and $47 million, or 0.3%, in 2023 and 2022, respectively, as compared with the prior year periods.

Acquisitions and divestitures resulted in a net increase in revenues of $576 million, or 2.9%, and $181 million, or 0.9%, in 2024 and 2023, respectively, as compared to the prior year periods.

The 2024 increase was primarily due to our acquisition of Stericycle in November 2024.

The remaining increases were related to our ongoing investment in tuck-in acquisitions of solid waste businesses.

Operating Expenses

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Risk management

Our operating expenses increased in 2023, as compared with 2022, primarily due to (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor costs and (ii) labor cost pressure from frontline employee market wage adjustments.

The increase in total operating expenses from prior year related primarily to (i) acquisitions;

(ii) inflationary pressure on wages and expenses;

(iii) higher recycling customer rebates resulting from an approximate 50% increase in single-stream recycling commodity prices;

(iv) volume growth within our WMSBS business which relies more extensively on subcontracted hauling and services than our Collection and Disposal businesses;

(v) increases in landfill operating costs due to wet weather and (vi) higher risk management spend, due in part, to increases in certain large loss claims reserves.

These increases were partially offset by lower diesel fuel prices and an increase in gains on the sale of non-strategic assets in 2024 as compared with the prior year.

Our operating expenses increased in 2023, as compared with 2022, primarily due to (i) inflationary cost pressures,

particularly for maintenance and repairs and subcontractor costs and (ii) labor cost pressure from frontline employee market wage adjustments.

These increases were offset, in part, by commodity-driven business impacts, particularly from lower recycling rebates reflected in costs of goods sold and lower fuel prices.

We continue to focus on operating efficiency and efforts to control our costs, which along with revenue growth, enabled us to improve operating costs as a percent of revenues in 2023 as compared with 2022.

Our operating expenses increased in 2022, as compared with 2021, primarily due to (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor costs;

(ii) commodity-driven business impacts from higher fuel and recycling prices and (iii) labor cost pressure from frontline employee wage adjustments.

These impacts were partially offset by our continued focus on operating efficiency and efforts to control costs as volumes grow.

Our focus on operating efficiency and efforts to control our costs, along with revenue growth, enabled us to improve operating costs as a percent of revenues in 2023 as compared with 2022.

Significant items affecting the comparison of operating expenses between reported periods include:

Labor and Related Benefits — The increase in labor and related benefits costs in 2023, as compared with 2022, was primarily driven by (i) employee market wage adjustments;

Labor and Related Benefits — Our investments in technology that focus on driving route optimization, improving driver retention, and creating efficiencies have positively impacted our labor and related benefits costs.

The increase in costs in 2024, as compared with 2023, was primarily driven by (i) increased headcount from our recent acquisitions and (ii) annual employee wage increases and higher annual incentive compensation.

These increases were offset, in part, by the benefit of productivity and operational efficiency gains.

The increase in labor and related benefits costs in 2023, as compared with 2022, was primarily driven by (i) employee market wage adjustments;

(ii) increased headcount primarily from acquisitions and (iii) increases in health and welfare costs and in medical care activity.

These increases were offset, in part, by lower annual incentive compensation.

The increase in labor and related benefits costs in 2022, as compared with 2021, was largely driven by (i) proactive market wage adjustments to hire and retain talent;

(ii) annual merit and annual incentive compensation cost increases and (iii) increases in health and welfare costs attributable to our investment in delivering a leading benefits program for our employees and increases in medical care activity.

Transfer and Disposal Costs — The increase in transfer and disposal costs in 2023, as compared with 2022, was primarily due to inflationary cost increases, which includes increased disposal fees at third-party sites and higher rates from our third-party haulers, offset, in part, by a decrease in collection volumes.

The increase in transfer and disposal costs in 2022, as compared with 2021, was largely driven by inflationary cost increases, which includes increased disposal fees at third-party sites and higher fuel from our third-party haulers, offset, in part, by decreases in residential collection and transfer volume.

Maintenance and Repairs — The increase in maintenance and repairs costs in 2023, as compared with 2022, was primarily driven by (i) continued inflationary cost increases for parts, supplies and third-party services, although the impact of such inflationary cost increases moderated throughout the year and (ii) labor cost increases for our technicians, including additional headcount.

The increase in maintenance and repairs costs in 2022, as compared with 2021, was largely driven by (i) inflationary cost increases for parts, supplies and third-party services;

(ii) additional fleet maintenance driven by supply chain constraints, which have delayed deliveries of new trucks;

(iii) labor cost increases for our technicians, including higher overtime;

(iv) increased building maintenance costs including improvements to facilities and (v) an increase in container repairs driven by delays in delivery of steel containers due to supply chain constraints.

Subcontractor Costs — The increase in subcontractor costs in 2023, as compared with 2022, was primarily due to (i) an increase in volumes in our WMSBS and SES businesses, which rely more extensively on subcontracted hauling and services than other parts of our Collection and Disposal businesses and (ii) continued inflationary cost increases, particularly labor and other costs from third-party haulers.

The increase in subcontractor costs in 2022, as compared with 2021, was largely driven by (i) inflationary cost increases, particularly for fuel and labor costs from third-party haulers and (ii) an increase in volumes in our WMSBS business, which relies more extensively on subcontracted hauling than other parts of our Collection and Disposal businesses.

Cost of Goods Sold — The decrease in cost of goods sold in 2023, as compared with 2022, was primarily driven by a 40% decrease in average single-stream recycling commodity prices.

The increase in cost of goods sold in 2022, as compared with 2021, was primarily driven by all-time high recycling commodity pricing in the first half of the year offset, in part, by the historically low pricing through the second half of the year that persisted into 2023.

Fuel — The decrease in fuel costs in 2023, as compared with 2022, was primarily due to a decrease of approximately 15% in average market prices for diesel fuel.

The approximate 50% increase in fuel costs in 2022, as compared with 2021, was primarily due to increases in market diesel and natural gas fuel prices as compared to the prior year.

Disposal and Franchise Fees and Taxes — The increase in disposal and franchise fees and taxes in 2023, as compared with 2022, was primarily driven by an overall rate increase in fees and taxes paid to municipalities on our disposal volumes.

The increase in disposal and franchise fees and taxes in 2022, as compared with 2021, was primarily driven by higher franchise fees, driven by an increase in landfill volumes, paid to certain municipalities where we operate and overall rate increases in our fees and taxes paid on our disposal volumes.

Landfill Operating Costs — The increase in landfill operating costs in 2023, as compared with 2022, was primarily due to (i) higher expenses for interest accretion on landfill and environmental remediation liabilities and (ii) an increase in remediation expense due to changes in measurement of certain environmental remediation obligations.

Our measurement of these balances includes application of a risk-free discount rate, which is based on the rate for U.S.

Treasury bonds.

In 2023, the U.S Treasury bond rate remained flat versus a significant increase in 2022, which decreased our remediation

expense in 2022.

Our landfill operating costs increased in 2022, as compared with 2021, primarily due to increases in methane and leachate management costs.

Risk Management — The decrease in risk management in 2023, as compared with 2022, was primarily due to lower levels of large loss claims.

Risk management costs increased slightly in 2022, as compared with 2021, primarily due to inflation in premiums and a stable level of large loss claims.

Other — Other operating costs decreased in 2023, as compared with 2022, primarily due to (i) supply chain rebates in 2023 and (ii) a favorable litigation settlement, which were offset, in part, by (i) inflationary cost pressures, although the impact of such continued inflationary cost increases moderated throughout the year;

Transfer and Disposal Costs — The increase in transfer and disposal costs in 2024, as compared with 2023, was primarily due to (i) inflationary cost increases, which includes increased disposal fees at third-party sites and higher rates from our third-party haulers and (ii) incremental third-party transfer and disposal costs as a result of our recent acquisitions.

These cost increases were offset, in part, by decreases in industrial and residential collection volumes.

The increase in transfer and disposal costs in 2023, as compared with 2022, was primarily due to inflationary cost increases, which includes increased disposal fees at third-party sites and higher rates from our third-party haulers, offset, in part, by a decrease in collection volumes.

Maintenance and Repairs — The increase in maintenance and repairs costs in 2024, as compared with 2023, was primarily driven by (i) inflationary and acquisition related cost increases for parts, supplies and third-party services, and (ii) annual wage increases and higher technician headcount.

These cost increases were offset, in part, by an improvement in new truck deliveries, which require less maintenance than older trucks, (ii) fleet rationalization efforts that removed older trucks and reduced our fleet count and (iii) improvements in operational efficiencies.

The increase in maintenance and repairs costs in 2023, as compared with 2022, was primarily driven by (i) continued inflationary cost increases for parts, supplies and third-party services, although the impact of such inflationary cost increases moderated throughout the year and (ii) labor cost increases for our technicians, including additional headcount.

Subcontractor Costs — The increase in subcontractor costs in 2024, as compared with 2023, was primarily due to (i) an increase in volumes in our WMSBS business, which relies more extensively on subcontracted hauling and services than our Collection and Disposal businesses (ii) continued inflationary cost increases related to labor costs from third-party haulers and (iii) our recent acquisitions.

These increases were offset, in part, by the impact of lower fuel prices on third-party subcontracted hauling and services.

The increase in subcontractor costs in 2023, as compared with 2022, was primarily due to (i) an increase in volumes in our WMSBS and SES businesses, which rely more extensively on subcontracted hauling and services than other parts of our Collection and Disposal businesses and (ii) continued inflationary cost increases, particularly labor and other costs from third-party haulers.

Cost of Goods Sold — The increase in cost of goods sold in 2024, as compared with 2023, was primarily driven by an approximate 50% increase in single-stream recycling commodity prices.

The decrease in cost of goods sold in 2023, as compared with 2022, was primarily driven by a 40% decrease in average single-stream recycling commodity prices.

Fuel — The decrease in fuel costs was primarily due to a decrease of approximately 10% in average market prices for diesel fuel in 2024 and 15% in 2023.

Disposal and Franchise Fees and Taxes — The increase in disposal and franchise fees and taxes in 2024, as compared with 2023, was primarily driven by an increase in landfill volumes and an overall rate increase in fees and taxes paid to municipalities on our disposal volumes.

The increase in disposal and franchise fees and taxes in 2023, as compared with 2022, was primarily driven by an overall rate increase in fees and taxes paid to municipalities on our disposal volumes.

Landfill Operating Costs — The increase in landfill operating costs in 2024, as compared with 2023, was primarily due to (i) higher leachate collection and treatment and site maintenance costs which can largely be attributed to particularly wet weather in certain markets throughout 2024 and (ii) increased methane collection and treatment costs.

Our landfill operating costs increased in 2023, as compared with 2022, primarily due to (i) higher expenses for interest accretion on landfill and environmental remediation liabilities and (ii) an increase in remediation expense due to changes in measurement of certain environmental remediation obligations.

Risk Management — The increase in risk management in 2024, as compared with 2023, was primarily due to (i) adjustments to our reserves for certain large loss claims;

(ii) higher auto and workers compensation claims costs and (iii) increases in premiums for property coverage.

These increases were offset, in part, by current year insurance recoveries for property claims associated with a fire and natural disasters.

Risk management costs decreased in 2023, as compared with 2022, primarily due to lower levels of large loss claims.

Other — Other operating costs increased in 2024, as compared with 2023, primarily due to (i) our recent acquisitions (ii) higher supply chain rebates in 2023 and (iii) a prior year favorable litigation settlement, which reduced our expenses in that period.

These increases were offset, in part, by gains on the sales of non-strategic assets in 2024.

Other operating costs decreased in 2023, as compared with 2022, primarily due to (i) supply chain rebates in 2023 and (ii) a favorable litigation settlement, which were offset, in part, by (i) inflationary cost pressures, although the impact of such continued inflationary cost increases moderated throughout the year;

(ii) higher utility costs at our facilities;

(iii) an increase in business travel and (iv) higher equipment rental costs.

Other operating cost increases in 2022, as compared with 2021, were primarily due to (i) inflationary cost pressures;

(ii) higher equipment rental costs attributable, in part, to supply chain constraints slowing normal course fleet and equipment orders;

(iii) higher utility costs at our facilities and (iv) an increase in business travel in 2022.

Additionally, a favorable litigation settlement in 2021 impacted the comparison.

Net gains on sales of certain assets during each year also impacted the comparability of the reported periods.

Selling, General and Administrative Expenses

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Provision for bad debts

Selling, general and administrative expenses in 2024, as compared with 2023, have increased due to (i) severance and consulting costs incurred in connection with the acquisition and integration of Stericycle, of which a significant portion are transaction and integration costs that are not expected to recur;

(ii) increased labor costs from higher annual and long-term incentive compensation and annual wage increases and (iii) increased professional fees to support strategic initiatives.

Partially offsetting these increases was a decline in litigation costs.

Selling, general and administrative expenses in 2023, as compared with 2022, decreased primarily due to (i) reduced professional fees in connection with investments in our digital platform, as certain digital projects have moved from higher cost development activities to implementation activities, and (ii) lower annual incentive compensation costs.

These decreases were partially offset by annual wage increases and increased litigation costs.

Selling, general and administrative expenses in 2022, as compared with 2021, increased primarily due to (i) strategic investments in our digital platform, including those that support our ongoing sustainability initiatives;

(ii) higher annual incentive compensation costs and merit increases for our employees;

(iii) increased business travel and entertainment expense and (iv) an increase in provision for bad debts, partially offset by (i) lower long-term incentive compensation costs;

(ii) market adjustments for deferred compensation plans related to investment performance and (iii) lower litigation costs.

The effective management of our costs resulted in a significant reduction in our selling, general and administrative expenses as a percentage of revenues when compared with each of the prior year periods.

Partially offsetting these reductions are annual merit increases and increased litigation costs.

Significant items affecting the comparison of our selling, general and administrative expenses between reported periods include:

Labor and Related Benefits — The increase in labor and related benefits costs in 2023, as compared with 2022, was primarily related to (i) annual wage increases for our employees;

Labor and Related Benefits — The increase in labor and related benefits costs in 2024, as compared with 2023, was primarily related to (i) costs incurred in connection with our acquisition of Stericycle, including severance costs and additional headcount;

(ii) higher annual and long-term incentive compensation costs and (iii) annual employee wage increases.

The increase in labor and related benefits costs in 2023, as compared with 2022, was primarily related to (i) annual wage increases for our employees;

(ii) market adjustments for deferred compensation plans related to investment performance and (iii) higher long-term incentive compensation costs, partially offset by lower annual incentive compensation costs and lower contract labor expenses.

The decrease in labor and related benefits costs in 2022, as compared with 2021, was primarily due to (i) lower long-term incentive compensation costs;

(ii) reductions in contract labor and (iii) market adjustments for deferred compensation plans related to investment performance, partially offset by higher annual incentive compensation and annual merit increases for our employees.

Professional Fees — The decrease in professional fees in 2023, as compared with 2022, was primarily attributable to reduced expenses in connection with investments in our digital platform, as certain digital projects have moved from higher cost development activities to implementation activities.

The increase in professional fees in 2022, as compared with 2021, was primarily driven by strategic investments in our digital platform, including those that support our ongoing sustainability initiatives, partially offset by lower acquisition and integration costs.

Provision for Bad Debts — The increase in provision for bad debts in 2023, as compared with 2022, was primarily related to an increase in revenue and customer-specific provisions required for bankruptcies of two of our WMSBS customers.

The increase in provision for bad debts in 2022, as compared with 2021, was primarily related to (i) increased revenue;

(ii) increased collection risk with certain customers and (iii) favorable adjustments to our reserves taken in 2021 as a result of improvement in customer account collections.

Other — The increase in other expenses in 2023, as compared with 2022, was primarily related to (i) increased litigation costs;

Professional Fees — The increase in professional fees in 2024, as compared with 2023, was primarily attributable to legal, consulting and accounting costs incurred to support strategic initiatives, including our acquisition of Stericycle.

The decrease in professional fees in 2023, as compared with 2022, was primarily attributable to reduced expenses in connection with investments in our digital platform.

Other — The increase in other expenses in 2024, as compared with 2023, was primarily related to (i) risk management costs incurred in connection with the acquisition and integration of Stericycle and (ii) increased spend across multiple cost categories including technology and travel.

These cost increases were partially offset by a decline in litigation costs.

The increase in other expenses in 2023, as compared with 2022, was primarily related to (i) increased litigation costs;

(ii) increased bank charges and (iii) higher advertising spend, which were partially offset by lower travel expenses and lower telecommunication costs.

The increase in other expenses in 2022, as compared with 2021, was primarily driven by costs associated with technology infrastructure to support our strategic investments in our digital platform and an increase in business travel and entertainment expense, partially offset by lower litigation costs.

Depreciation, Depletion and Amortization Expenses

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Amortization of intangible assets

The increase in depreciation of tangible property and equipment in 2024, as compared with 2023, was driven by (i) increased investments in capital assets such as trucks and containers and (ii) the acquisition of Stericycle.

The increase in depletion of landfill airspace in 2024, as compared to with 2023, was driven by changes in amortization rates from revisions in landfill estimates and volume increases, partially offset by the closure of a landfill in our East Tier.

The increase in amortization of intangibles was driven by the amortization of acquired intangible assets.

The increase in depreciation of tangible property and equipment in 2023, as compared with 2022, was mainly influenced by strategic investments in our digital platform and investments in capital assets to service our customers, such as machinery and containers.

The decrease in depletion of landfill airspace in 2023, as compared with 2022, was primarily driven by reductions in volume partially offset by the reopening of a previously closed site in our East Tier.

The increase in depreciation of tangible property and equipment in 2022, as compared with 2021, was primarily driven by investments in capital assets, including containers to service our customers and strategic investments in our digital platform.

The increase in depletion of landfill airspace in 2022, as compared with 2021, was primarily driven by changes in depletion rates from revisions in landfill cost estimates and increased volumes at our landfills, partially offset by a prior year charge due to management’s decision to close a landfill in our West Tier earlier than expected, resulting in the acceleration of the timing of capping, closure, and post-closure activities.

The decrease in amortization of intangible assets in 2022, as compared with 2021, was primarily driven by the amortization of acquired intangible assets from the acquisition of Advanced Disposal Services, Inc.

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

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Asset impairments

During the year ended December 31, 2024, we recognized $82 million of net charges primarily consisting of (i) 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;

(ii) 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 acquisition of Stericycle and (iii) a $13 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site, as discussed in Note 10 to the Consolidated Financial Statements for further information.

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

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

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

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

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

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WM Renewable Energy

WM Healthcare Solutions

Corporate and Other

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* Percentage change does not provide a meaningful comparison.

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

Collection and Disposal — The most significant items affecting the results of operations of our Collection and Disposal businesses during the three years ended December 31, 2024 are summarized below:

● Income from operations in our Collection and Disposal businesses increased in 2024, as compared with 2023, primarily due to (i) our focus on pricing our services to keep pace with inflationary cost pressures, alongside intentional efforts to improve efficiency and operating costs incurred to serve our customers;

(ii) contributions from higher landfill volumes generated from special waste and municipal solid waste and (iii) gains on the sales of non-strategic assets.

These increases were partially offset by (i) a decline in contributions from lower industrial volumes;

(ii) an increase in landfill operating costs and (iii) increased depreciation expenses with relation to our fleet, machinery and equipment as well as higher depletion costs at our landfills .

● Income from operations in our Collection and Disposal businesses increased in 2023, as compared with 2022, primarily due to revenue growth in our collection and disposal operations driven by both yield and volume.

This increase was partially offset by (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor costs and (ii) labor cost pressure from frontline employee market wage adjustments.

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

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

(ii) labor cost increases from frontline employee wage adjustments and (iii) divestitures, asset impairments and unusual items discussed below in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net , that impacted our East Tier results.

Recycling Processing and Sales — Income from operations in our Recycling Processing and Sales segment decreased in 2023, as compared with 2022, primarily due to (i) a $168 million goodwill impairment charge, with $22 million attributable to noncontrolling interests, which was partially offset by the recognition of $46 million of income related to the reversal of contingent consideration, as discussed above in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net ;

Recycling Processing and Sales — Income from operations in our Recycling Processing and Sales segment increased in 2024, as compared with 2023, primarily due to (i) net charges of $122 million recognized in 2023 related to a goodwill impairment and reversal of contingent consideration, as discussed below and (ii) benefits from the automation of our recycling facilities as well as investments in new facilities and cost management.

These improvements were partially offset by the impact of higher costs incurred from the temporary shutdown of facilities for technology upgrades.

Income from operations in our Recycling Processing and Sales segment decreased in 2023, as compared with 2022, primarily due to (i) a $168 million goodwill impairment charge, with $22 million attributable to noncontrolling interests, which was partially offset by the recognition of $46 million of income related to the reversal of contingent consideration as discussed above in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net ;

(ii) a decline in recycling commodity prices;

(iii) lower revenue resulting from the temporary shutdown of facilities for technology upgrades combined with increased costs associated with the transportation and third-party tip fees for processing recyclables and (iv) startup costs linked to the establishment of a new processing facility.

Income from operations in our Recycling Processing and Sales segment decreased in 2022, as compared with 2021, primarily due to the decline in recycling commodity prices.

WM Renewable Energy — Income from operations in our WM Renewable Energy segment decreased in 2023, as compared with 2022, primarily due to (i) lower energy prices and the value of RINs and (ii) increased operating and selling, general and administrative costs associated with the construction of new projects to increase the beneficial use of landfill gas.

WM Renewable Energy — Income from operations in our WM Renewable Energy segment increased in 2024, as compared with 2023, primarily due to (i) higher RIN quantities generated and sold at higher market values in the current year and (ii) increased beneficial use of landfill gas sold to third parties due to the completion of additional projects.

Income from operations in our WM Renewable Energy segment decreased in 2023, as compared with 2022, primarily due to (i) lower energy prices and the value of RINs and (ii) increased operating and selling, general and administrative costs

associated with the construction of new projects to increase the beneficial use of landfill gas.

These decreases were partially offset by an increase in volume of RFS credits, electricity and natural gas.

Income from operations in our WM Renewable Energy segment increased in 2022, as compared with 2021, primarily due to higher market values for RINs credits.

Corporate and Other — Income from operations in Corporate and Other decreased in 2023, as compared with 2022, primarily due to non-cash impairment charges for certain investments as discussed above in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net .

Income from operations in Corporate and Other decreased in 2022, as

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

WM Healthcare Solutions — Our WM Healthcare Solutions segment generated a loss of $69 million in 2024, which was largely attributable to acquisition and integration related expenses.

There is no 2023 or 2022 activity as Stericycle was acquired on November 4, 2024.

Corporate and Other — The costs incurred by our Corporate and Other segment increased in 2024, as compared with 2023, primarily due to (i) increased professional and transaction fees to support strategic initiatives, including our acquisition of Stericycle;

(ii) higher annual and long-term incentive compensation costs and (iii) an increase in risk management costs due to an increase in our large loss reserves as well as higher auto and workers compensation claims.

This increase was partially offset by the impact of non-cash impairment charges for certain investments incurred in 2023, as discussed below.

Income from operations in Corporate and Other decreased in 2023, as compared with 2022, primarily due to impairment charges of (i) $107 million for certain investments in waste diversion technology businesses and (ii) $17 million to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site.

Interest Expense, Net

Our interest expense, net was $598 million, $500 million and $378 million in 2024, 2023 and 2022, respectively.

The increase in interest expense, net for 2024 is primarily related to an increase in our average debt balances to fund our acquisition of Stericycle.

The increase in interest expense, net for 2023 is primarily related to an increase in our weighted average borrowing rate of approximately 80 basis points due to increased rates on floating-rate debt and higher fixed rates on refinancing as well as an increase in average debt balances to fund growth.

To mitigate the impact of increasing interest rates and to provide certainty in cost, we elected to replace certain floating-rate debt, specifically our $1.0 billion two-year, U.S.

term credit agreement (“Term Loan”) and commercial paper borrowings, with longer-term, fixed-rate debt through our senior notes issuances as discussed within Liquidity and Capital Resources below.

The increase in interest expense, net for 2022 was primarily related to borrowings incurred under our Term Loan and increases in interest rates on our floating-rate debt, including commercial paper and variable-rate tax-exempt bonds.

Partially offsetting these increases in 2023 and 2022 were benefits from higher capitalized interest and increases in interest income as a result of higher cash and cash equivalent balances as well as higher investment rates.

Partially offsetting these increases were benefits from higher capitalized interest and increases in interest income as a result of higher cash and cash equivalent balances as well as higher investment rates.

See Note 6 to the Consolidated Financial Statements for more information related to our debt balances.

Loss on Early Extinguishment of Debt, Net

In May 2021, WMI issued $950 million of senior notes and used the net proceeds of $942 million as well as available cash on hand to retire $1.3 billion of certain high-coupon senior notes.

The loss on early extinguishment of debt for 2021 includes $220 million of charges related to this tender offer, including cash paid of $211 million related to premiums and other third-party costs, and $9 million primarily related to unamortized discounts and debt issuance costs.

Equity in Net Losses of Unconsolidated Entities

We recognized equity in net losses of unconsolidated entities of $60 million, $67 million and $36 million in 2023, 2022 and 2021, respectively.

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

In October 2024, we drew $5.2 billion of borrowings under the Term Credit Agreement that were applied to funding our acquisition of Stericycle.

In November 2024, we repaid all outstanding borrowings with net proceeds from our November 2024 issuance of $5.2 billion of senior notes and contemporaneously terminated the Term Credit Agreement, resulting in a $7 million loss on early extinguishment of debt.

Equity in Net Income (Losses) of Unconsolidated Entities

We recognized equity method investment income of $4 million in 2024 and losses of $60 million and $67 million in 2023 and 2022, respectively.

These financial statement impacts are largely related to our noncontrolling interests in entities established to invest in and manage low-income housing properties.

In 2024, we adopted Accounting Standards Update (“ASU”) 2023-02, and, as a result, beginning in 2024, the amortization of these investments is recognized as a component of income tax expense.

Refer to Notes 2 and 8 to the Consolidated Financial Statements for further discussion.

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

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The comparability of our income tax expense for the reported periods has been primarily affected by the following:

● Investments Qualifying for Federal Tax Credits — Our low-income housing properties investments reduced our income tax expense by $108 million, $99 million and $74 million, primarily due to tax credits realized from these investments as well as the tax benefits from pre-tax losses for the years ended December 31, 2023, 2022 and 2021, respectively.

See Note 18 to the Consolidated Financial Statements for additional information related to these unconsolidated variable interest entities;

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

The impact of these non-deductible charges would have resulted in a decrease to income tax expense of $50 million.

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

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

and Canada that produce renewable electricity and RNG.

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

We completed construction of five RNG facilities in 2024 and one RNG facility in 2023, resulting in a reduction to our income tax expense of $137 million and $8 million, respectively, for investment tax credits under Section 48 (additional information related to these tax credits is included below under the Tax Legislation section);

● Low-Income Housing — 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 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 Consolidated Statements of Operations.

W e recognized additional income tax expense of $78 million in 2024, related to amortization under ASU 2023-02.

We recognized net losses of $66 million and $65 million in 2023 and 2022, respectively, and a reduction in our income tax expense of $104 million, $108 million and $99 million in 2024, 2023, and 2022, respectively, primarily due to federal tax credits realized from these investments as well as the tax benefits from the pre-tax losses realized.

See Notes 2, 8, and 18 to the Consolidated Financial Statements for additional information related to these unconsolidated variable interest entities;

● Tax Implications of Impairments — During the years ended December 31, 2024 and 2023, we recognized additional income tax expense of $14 million and $50 million, respectively, due to non-cash impairment charges that were not deductible for tax purposes in the year of impairment.

The non-cash impairment charge recognized during 2022 was deductible for tax purposes.

See Note 11 to the Consolidated Financial Statements for more information related to our impairment charges;

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

This increase is largely due to an increase in taxable interest income associated with the

Company’s election to deduct landfill closure and post-closure costs for income tax purposes when incurred and accrued.

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

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

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

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

and Canada, as well as other state and local jurisdictions.

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

During the reported periods, we settled various tax audits which resulted in a reduction in our income tax expense of $5 million, $6 million and $13 million for the years ended December 31, 2023, 2022 and 2021, respectively;

● Tax Legislation — The Inflation Reduction Act of 2022 (“IRA”) was signed into law by President Biden on August 16, 2022 and contains several tax-related provisions, including with respect to (i) alternative fuel tax credits;

● Tax Legislation — The Inflation Reduction Act of 2022 (“IRA”) contains several tax-related provisions, including with respect to (i) alternative fuel tax credits;

(ii) tax incentives for investments in renewable energy production, carbon capture, and other climate actions and (iii) the overall measurement of corporate income taxes.

Given the complexity and uncertainty around the applicability of the legislation to our specific facts and circumstances, we continue to analyze the IRA provisions to identify and quantify potential opportunities and applicable benefits included in the legislation.

The provisions of the IRA related to alternative fuel tax credits secure approximately $55 million of annual pre-tax benefit (recorded as a reduction in our operating expense) for tax credits in 2022, 2023 and 2024.

With respect to the investment tax credit, as expanded by the IRA, we expect the cumulative benefit to be between $250 million and $350 million, a large portion of which is anticipated to be realized in 2024 through 2026.

Recently, however, the IRS issued proposed regulations applicable to the investment tax credits that could call into question our ability to realize some, or all, of this tax benefit, which would negatively impact financial expectations in connection with our significant planned and ongoing investments in sustainability growth projects in our WM Renewable Energy segment.

The proposed regulations provide a public comment period, culminating in public hearings before the Treasury Department, to allow taxpayers to provide input prior to the issuance of final regulations.

In coordination with other members of the RNG industry, we are actively using this public comment period to work with external advisors, the U.S.

Congress, the current federal administration, and other biogas sector stakeholders to encourage the Treasury Department to further refine its analysis prior to publication of final regulations that more accurately reflect the express language and legislative intent of the statute with respect to the investment tax credit.

However, there is no guarantee that such efforts will be successful.

We expect that the production tax credit incentives for investments in renewable energy and carbon capture, as expanded by the IRA, will likely result in an incremental benefit to the Company, although at this time, the anticipated amount of such benefit has not been quantified.

Our current expectation is that the IRA’s minimum corporate tax will not have an impact on the Company.

Finally, in accordance with the IRA, we incurred a nondeductible excise tax of 1% on the net value of certain stock repurchases in 2023, which is reflected in the cost of purchasing the underlying shares as a component of treasury stock in our Consolidated Balance Sheet.

Additionally, numerous countries have agreed to a statement in support of the Organization for Economic Co-operation and Development (“OECD”) model rules that propose a global minimum tax rate of 15%.

The Company operates in countries that have agreed to implement the global minimum tax, and the OECD continues to refine technical guidance for such.

At this time, we do not expect the 15% global minimum tax to have a material, if any, impact to our income taxes, and we will continue to monitor and evaluate the potential impact on our business in future periods.

The provisions of the IRA related to alternative fuel tax credits secure approximately $60 million of annual pre-tax benefit (recorded as a reduction in our operating expense) from tax credits in 2023 and 2024.

The alternative fuel credit expired at the end of 2024 and will not provide any future benefit to the Company absent further legislative action.

With respect to the investment tax credit, we expect the cumulative benefit to be between $300 million and $400 million, a large portion of which is anticipated to be realized in 2024 through 2026.

The expected benefit from the investment tax credit for 2025 and 2026 is dependent on a number of estimates and assumptions, including the timing of project completion.

Finally, we expect that the production tax credit incentives for investments in renewable energy and carbon capture, as expanded by the IRA, will likely result in an incremental benefit to the Company, although at this time, the anticipated amount of such benefit has not been quantified due, in part, to the lack of regulatory guidance.

See Note 8 to the Consolidated Financial Statements for more information related to income taxes.

Landfill and Environmental Remediation Discussion and Analysis

We owned or operated 258 solid waste landfills and five secure hazardous waste landfills as of December 31, 2023 and December 31, 2022.

We owned or operated 257 solid waste landfills and five secure hazardous waste landfills as of December 31, 2024 and 258 solid waste landfills and five secure hazardous waste landfills as of December 31, 2023.

For these landfills, the following table reflects changes in capacity, as measured in tons of waste, for the year ended December 31 and remaining airspace, measured in cubic yards of waste, as of December 31 (in millions):

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Depletable tons received

Changes in engineering estimates and other (c) (d)

Balance as of end of year (in tons) (e)

Balance as of end of year (in cubic yards) (e)

Changes in engineering estimates and other (c)

Balance as of end of year (in tons) (d)

Balance as of end of year (in cubic yards) (d)

(a) Amounts reflected here relate to the combined impacts of (i) new expansions pursued;

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optimizing the placement of daily cover materials and increasing initial compaction through improved landfill equipment, operations and training.

(d) In 2022, a change in accounting estimate resulted in an increase of 190 million tons across certain landfills.

(e) See Note 2 to the Consolidated Financial Statements for discussion of converting remaining cubic yards of airspace to tons of capacity.

(d) See Note 2 to the Consolidated Financial Statements for discussion of converting remaining cubic yards of airspace to tons of capacity.

The depletable tons received at our landfills for the year ended December 31 are shown below (tons in thousands):

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Solid waste landfills closed, divested or lease or other contractual agreement expired during related year

(a) As of December 31, 2023 and 2022, we had 17 landfills which were not accepting waste.

As of December 31, 2023, we owned or controlled the management of 237 sites with remedial activities, are in closure or have received a certification of closure or post-closure from the applicable regulatory agency.

(a) As of December 31, 2024 and 2023, we had 15 and 17 landfills, respectively, which were not accepting waste.

As of December 31, 2024, we owned or managed 239 sites that are either in closure or post-closure, have received a certification post-closure, or are regulated under a remedial action plan.

Based on remaining permitted airspace as of December 31, 2024 and projected annual disposal volume, the weighted average remaining landfill life for all of our owned or operated landfills is approximately 38 years.

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As of December 31, 2024, we estimate that we will spend approximately $845 million in 2025, and approximately $1.8 billion in 2026 and 2027 combined, for the construction and development of our landfill assets.

The specific timing of landfill capital spending is dependent on future events and spending estimates are subject to change due to fluctuations in landfill waste volumes, changes in environmental requirements and other factors impacting landfill operations.

The specific timing

of landfill capital spending is dependent on future events and spending estimates are subject to change due to fluctuations in landfill waste volumes, changes in environmental requirements and other factors impacting landfill operations.

Landfill and Environmental Remediation Liabilities — As we accept waste at our landfills, we incur significant asset retirement obligations, which include liabilities associated with landfill final capping, closure and post-closure activities.

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As of December 31, 2024, we had approximately $4.0 billion of debt maturing within the next 12 months, including (i) $1.4 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities;

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

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

(ii) $1.2 billion of short-term borrowings under our commercial paper program (net of related discount on issuance);

(iii) $422 million of 3.125% senior notes that mature in March 2025;

(iv) $500 million of 0.750% senior notes that mature in November 2025 and (v) $438 million of other debt with scheduled maturities within the next 12 months, including $298 million of tax-exempt bonds.

As of December 31, 2024, we have classified $2.6 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”).

The remaining $334 million of debt maturing in the next 12 months is classified as current obligations.

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

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

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

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

The remaining $1.4 billion of debt maturing in the next 12 months is classified as current obligations.

Senior Notes — In July 2024, WMI issued $750 million of 4.950% senior notes due July 2027 and $750 million of 4.950% notes due July 2031, the net proceeds of which were $1.49 billion.

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

We also repaid $156 million of WMI’s 3.500% senior notes upon maturity in May 2024.

In August 2024, WMI entered into a delayed draw Term Credit Agreement in a principal amount of up to $7.2 billion (the “Term Credit Agreement”).

In October 2024, we drew $5.2 billion of borrowings under the Term Credit Agreement that were applied to funding our acquisition of Stericycle.

In November 2024, we repaid all outstanding borrowings and contemporaneously terminated the Term Credit Agreement, resulting in a $7 million loss on early extinguishment of debt.

See Note 6 to the Consolidated Financial Statements for further discussion.

In November 2024, we issued senior notes, the net proceeds of which were approximately $5.2 billion, consisting of (i) $1.0 billion of 4.500% senior notes due March 2028;

(ii) $700 million of 4.650% senior notes due March 2030;

(iii) $750 million of 4.800% senior notes due March 2032;

(iv) $1.5 billion of 4.950% senior notes due March 2035;

and (v) $1.25 billion of 5.350% senior notes due October 2054.

We used the net proceeds to repay all outstanding borrowing under the Term Credit Agreement.

Stericycle Exchange Offer and Consent Solicitation — On November 8, 2024, we completed our private offer to eligible holders to exchange $500 million of outstanding 3.875% senior notes issued by Stericycle (the “Stericycle Notes”) for new notes issued by us (the “WM Notes”) and cash.

The WM Notes have the same interest rate, interest payment dates, and maturity date as the exchanged Stericycle Notes but differ in certain respects from the Stericycle Notes, including with respect to the redemption provisions.

Approximately $485 million in aggregate principal amount of the Stericycle Notes, or 97%, were tendered and accepted, and new WM Notes were issued.

The portion of Stericycle Notes not exchanged, approximately $15 million, remains an outstanding obligation of Stericycle, our wholly-owned subsidiary.

The debt exchange is accounted for as a modification of debt, as the financial terms of the WM Notes do not differ from the Stericycle Notes, and there is no substantial difference between the present value of cash flows under each respective set of notes.

In connection with the exchange offer, we solicited and obtained sufficient consents to amend the Stericycle Notes and related indenture to eliminate substantially all the restrictive covenants, restrictive provisions and events of default, other than payment-related, guarantee-related and bankruptcy-related events of default, and such amendments took effect with respect to the remaining Stericycle Notes on November 8, 2024.

We have credit lines in place to support our liquidity and financial assurance needs.

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Net cash used in investing activities

Net cash used in financing activities

Net Cash Provided by Operating Activities — Our operating cash flows increased in 2023, as compared with 2022, by $183 million primarily driven by higher earnings attributable to our Collection and Disposal businesses and lower income tax payments as a result of a deposit of approximately $103 million that was made to the IRS in 2022 related to a disputed tax matter discussed within Note 8 to the Consolidated Financial Statements.

These increases were partially offset

by (i) unfavorable changes in working capital, net of effects of acquisitions and divestitures;

Net cash provided by (used in) financing activities

Net Cash Provided by Operating Activities — Our operating cash flows increased in 2024, as compared with 2023, by $671 million primarily driven by (i) higher earnings in our Collection and Disposal businesses;

(ii) favorable changes in working capital, net of effects of acquisitions and divestitures and (iii) lower annual incentive compensation payments.

This increase was partially offset by higher cash interest and income tax payments.

Our operating cash flows increased in 2023, as compared with 2022, by $183 million primarily driven by higher earnings attributable to our Collection and Disposal businesses and lower income tax payments as a result of a deposit of approximately $103 million that was made to the IRS in 2022 related to a disputed tax matter discussed within Note 8 to the Consolidated Financial Statements.

These increases were partially offset by (i) unfavorable changes in working capital, net of effects of acquisitions and divestitures;

(ii) higher interest payments and (iii) higher incentive compensation payments.

Our operating cash flows for 2022, as compared with 2021, increased by $198 million.

The increase was largely driven by increased earnings in our Collection and Disposal businesses and WM Renewable Energy segment.

We also experienced lower interest payments due to timing and refinancing activities in 2021 that reduced our overall interest rate.

Partially offsetting our increase in cash from operating activities were higher income tax payments as a result of higher earnings in 2022 and a deposit of approximately $103 million that was made to the IRS related to a disputed tax matter.

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

See Note 8 to the Consolidated Financial Statements for further details.

Net Cash Used in Investing Activities — The most significant items affecting the comparison of our investing cash flows for the periods presented are summarized below:

● Acquisitions — Our spending on acquisitions was $7,503 million, $173 million and $377 million in 2024, 2023 and 2022, respectively, of which $7,488 million, $170 million and $377 million, respectively, are considered cash used in investing activities.

The remaining spend is financing or operating activities related to the timing of contingent consideration paid.

Substantially all of these acquisitions are related to our Collection and Disposal businesses.

Our acquisition spending in 2022 was primarily attributable to the purchase of a controlling interest in a business intended to accelerate our film and plastic wrap recycling capabilities.

See Note 17 to the Consolidated Financial Statements for additional information.

We continue to focus on accretive acquisitions and growth opportunities that will enhance and expand our existing service offerings.

The remaining spend is cash used in financing activity related to the timing of contingent consideration paid.

Excluding our acquisition of Stericycle in 2024, substantially all of the remaining acquisitions are related to our solid waste and recycling businesses.

● Capital Expenditures — We used $3,231 million, $2,895 million and $2,587 million for capital expenditures in 2024, 2023 and 2022, respectively.

The increase in capital spending is primarily driven by our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments, as well as inflationary increases in many fixed asset categories required to support ongoing operations and investments in the Company’s landfills to reduce greenhouse gas emissions.

The increase in 2022 is primarily driven by our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments, as well as timing differences in our fixed asset purchases to support our Collection and Disposal businesses.

The increase in capital spending in 2024 is primarily driven by (i) our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments;

(ii) an increase in truck spending in the current year due to supply chain constraints on truck deliveries in the prior year and (iii) capital expenditures within our WM Healthcare Solutions segment to support the business.

The increase in 2023 is primarily driven by our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments, as well as inflationary increases in many fixed asset categories required to support ongoing operations and investments in the Company’s landfills to reduce greenhouse gas emissions .

The Company continues to maintain a disciplined focus on capital management to prioritize investments for expansion, the replacement of aging assets and assets that support our strategy of differentiation and continuous improvement through efficiency and innovation.

The Company expects to invest $2.8 billion to $2.9 billion in growth investments across the recycling and renewable energy platforms from 2022 to 2026, which includes the $1.325 billion already invested in 2022 and 2023.

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

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

In 2021, our proceeds are primarily the result of the sale of certain non-strategic Canadian operations.

The Company expects to invest $3.0 billion in growth investments across the recycling and renewable energy platforms from 2022 to 2026, which includes the $1.7 billion already invested in 2023 and 2024.

● Divestitures — Proceeds from divestitures of businesses and other assets, net of cash divested, were $158 million, $78 million and $27 million in 2024, 2023 and 2022, primarily as the result of the sale of certain non-strategic assets.

● Other, Net — Our spending within other, net was $40 million, $104 million and $126 million in 2024, 2023 and 2022, respectively.

During 2024, 2023 and 2022, we used $4 million, $61 million and $23 million, respectively, of cash from restricted cash and cash equivalents to invest in available-for-sale securities.

In 2023, we used $20 million to make an initial cash payment associated with a low-income housing investment.

In 2022, we used $67 million to fund secured convertible promissory notes associated with an acquisition and $28 million to make an initial cash payment associated with a low-income housing investment.

Our 2021 cash spend was partially offset by proceeds received from the sale of an equity method investment.

Net Cash Used in Financing Activities — The most significant items affecting the comparison of our financing cash flows for the periods presented are summarized below:

During 2024, 2023 and 2022, we used $33 million, $20 million and $28 million, respectively, to make initial cash payments associated with low-income housing investments.

In 2022, we also used $67 million to fund secured convertible promissory notes associated with an acquisition.

Net Cash Provided by (Used in) Financing Activities — The most significant items affecting the comparison of our financing cash flows for the periods presented are summarized below:

● Debt Borrowings (Repayments) — The following summarizes our cash borrowings and repayments of debt for the year ended December 31 (in millions):

Commercial paper program

Term loan (a)

Tax-exempt bonds

Commercial paper program

Term loan (a)

Tax-exempt bonds

Net cash borrowings (repayments)

(a) In October 2024, we drew $5.2 billion of borrowings under the Term Credit Agreement that were applied to funding our acquisition of Stericycle.

In November 2024, we repaid all outstanding borrowings and contemporaneously terminated the Term Credit Agreement.

Refer to Note 6 to the Consolidated Financial Statements for additional information related to our debt borrowings and repayments.

● Premiums and Other Paid on Early Extinguishment of Debt — During 2021, we paid premiums and other third-party costs of $211 million to retire certain high-coupon notes.

See Loss on Early Extinguishment of Debt, Net for further discussion.

● Common Stock Repurchase Program — For the periods presented, all share repurchases have been made in accordance with financial plans approved by our Board of Directors.

We allocated $262 million, $1,302 million and $1,500 million of available cash to common stock repurchases during 2024, 2023, and 2022, respectively.

See Note 13 to the Consolidated Financial Statements for additional information.

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

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

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

In 2024, we announced our temporary suspension of share repurchase activity as a result of the acquisition of Stericycle.

We expect to resume share repurchase once the Company’s leverage returns to targeted levels, which is currently projected to be about 18 months after the November 2024 acquisition of Stericycle.

See Note 13 to the Consolidated Financial Statements for additional information about our share repurchase activity.

● Cash Dividends — For the periods presented, all dividends have been declared by our Board of Directors.

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● Exercise of Common Stock Options — The exercise of common stock options generated financing cash inflows of $53 million, $44 million and $44 million from the exercise of 693,000, 597,000 and 675,000 of employee stock options during 2024, 2023 and 2022, respectively.

● Other, Net — In 2022, we acquired a controlling interest in a business engaged in accelerating film and plastic wrap recycling capabilities, and in the fourth quarter of 2024, we acquired the remaining minority interests in this business for $41 million.

Free Cash Flow

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In some cases, these estimates are difficult to determine, and we must exercise significant judgment.

In preparing our financial statements, the most difficult, subjective and complex estimates and the assumptions that present the greatest amount of uncertainty relate to our accounting for landfills, environmental remediation liabilities, long-lived asset impairments, intangible asset impairments and the fair value of assets and liabilities acquired in business combinations.

acquired in business combinations.

Each of these items is discussed in additional detail below and in Note 2 to the Consolidated Financial Statements.

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The projection of these landfill costs is dependent, in part, on future events.

The remaining depletable basis of each landfill

includes costs to develop a site to its remaining permitted and expansion airspace and includes amounts previously expended and capitalized, net of accumulated airspace depletion, and projections of future purchase and development costs.

The remaining depletable basis of each landfill includes costs to develop a site to its remaining permitted and expansion airspace and includes amounts previously expended and capitalized, net of accumulated airspace depletion, and projections of future purchase and development costs.

Final Capping Costs — We estimate the cost for each final capping event based on the area to be capped and the capping materials and activities required.

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

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

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

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

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We then apply that multiple to the reporting units’ earnings to estimate their fair values.

We believe that this approach may

also be appropriate in certain circumstances because it provides a fair value estimate using valuation inputs from entities with operations and economic characteristics comparable to our reporting units.

We believe that this approach may also be appropriate in certain circumstances because it provides a fair value estimate using valuation inputs from entities with operations and economic characteristics comparable to our reporting units.

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

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Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net .

Macroeconomic pressures, including inflation and rising interest rates, and market disruption resulting in labor, supply chain and transportation constraints have impacted our results.

Supply chain constraints have caused delayed delivery of fleet, steel containers and other purchases.

Aspects of our business rely on third-party transportation providers, and such services have become more limited and expensive.

We continue to take proactive steps to recover and mitigate inflationary cost pressures through our overall pricing efforts and by managing our costs through efficiency, labor productivity, and investments in technology to automate certain aspects of our business.

See Note 11 to the Consolidated Financial Statements for additional information related to Asset Impairments and Unusual Items.

Variability in economic conditions, including inflation, interest rates, employment trends, and supply chain reliability, can create risk and uncertainty in financial outlook.

These efforts may not be successful for various reasons including the pace of inflation, operating cost inefficiencies, market responses, and contractual limitations, such as the timing lag in our ability to recover increased costs under certain contracts that are tied to a price escalation index with a lookback provision.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis