Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This section includes a discussion of our results of operations for the three years ended December 31, 2024. This discussion may contain forward-looking statements. See “Cautionary Statement about Forward-Looking Statements” in Part I of this Annual Report on Form 10-K for more information. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or anticipated results. These risks and uncertainties include, but are not limited to, those described in Part I, “Item 1A. Risk Factors ” and elsewhere in this report and may also be described from time to time in our future reports filed with the U.S. Securities and Exchange Commission (“SEC”). The following discussion should be read considering those disclosures and together with the Consolidated Financial Statements and the notes thereto.
Overview
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. We own or operate the largest network of landfills throughout the U.S. and Canada. In order to make disposal more practical for larger urban markets, where the distance to landfills is typically farther, we manage transfer stations that consolidate, compact and transport waste efficiently and economically. 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”) 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.
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.
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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; (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
Our Collection and Disposal businesses provide integrated environmental services, including collection, transfer, disposal and resource recovery services. We evaluate our Collection and Disposal businesses primarily through two geographic segments, East Tier and West Tier. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. 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. These specialized services are targeted at large industrial customers managed through our Sustainability and Environmental Solutions (“SES”) business or geographically dispersed customers managed through our Strategic Business Solutions (“WMSBS”) business. Also included within Other Ancillary are the results of non-operating entities that provide financial assurance and self-insurance support for our business, net of intercompany activity.
Our Collection and Disposal businesses’ operating revenues are primarily generated from fees charged for our collection, transfer, disposal and resource recovery services. Revenues from our collection operations are influenced by factors such as collection frequency, type of collection equipment furnished, type and volume or weight of the waste collected, distance to the disposal facility or recycling facility and our disposal costs. Revenues from our landfill operations consist of tipping fees, which are generally based on the type and weight or volume of waste being disposed of at our disposal facilities. Fees charged at transfer stations are generally based on the weight or volume of waste deposited, considering our cost of loading, transporting and disposing of the solid waste at a disposal site.
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) 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.
Recycling Processing and Sales
Our Recycling Processing and Sales segment includes the processing and sales of materials collected from residential, commercial and industrial customers. The materials are delivered to and processed at one of our many recycling facilities. Through our brokerage business, we also manage the marketing of recycling commodities that are processed in our facilities and by third parties by maintaining comprehensive service centers that continuously analyze market prices, logistics, market demands and product quality.
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
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from our residential, commercial, and industrial customers which is included within our Collection and Disposal businesses.
WM Renewable Energy
Our WM Renewable Energy segment develops, operates and promotes projects for the beneficial use of landfill gas. Landfill gas is produced naturally as waste decomposes in a landfill. The methane component of the landfill gas is a readily available, renewable energy source that can be gathered and used beneficially as an alternative to fossil fuel. WM Renewable Energy converts landfill gas into several sources of renewable energy to be sold which include RNG, electricity and capacity, heat and/or steam. WM Renewable Energy also generates and sells (i) RINs under the Renewable Fuel Standard (“RFS”) program; (ii) other credits under a variety of state programs associated with the use of RNG in our compressed natural gas fleet and (iii) RECs associated with the production of electricity. The RINs, RECs, and other credits are sold to counterparties who are obligated under the regulatory programs and have a responsibility to procure RINs, RECs, and other credits proportionate to their fossil fuel production and imports. RINs and RECs prices generally fluctuate in response to regulations enacted by the Environmental Protection Agency (“EPA”) or other regulatory bodies, as well as changes in supply and demand.
As of December 31, 2024, we had 102 landfill gas beneficial use projects producing commercial quantities of methane gas at owned or operated landfills. For 65 of these projects, the processed gas is used to fuel electricity generators. The electricity is then sold to public utilities, municipal utilities or power cooperatives. For 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 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 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.
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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
We also provide additional services that are not managed through our operating segments, which are presented in this report as Corporate and Other. 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 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.
Business Environment
The waste industry is a comparatively mature and stable industry. 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. 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, 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. Consistent with our Company’s long-standing commitment to sustainability and environmental stewardship, we have published our 2024 Sustainability Report, providing details on our sustainability-related performance and outlining progress towards our 2030 sustainability goals. 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 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. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation .
We encounter intense competition from governmental, quasi-governmental and private service providers based on pricing, and to a much lesser extent, the nature of service offerings, particularly in the residential line of business. Our industry is directly affected by changes in general economic factors, including increases and decreases in consumer spending, business expansions and construction activity. These factors generally correlate to volumes of waste generated and impact our revenue. Negative economic conditions and other macroeconomic trends can and have caused customers to reduce their service needs. Such negative economic conditions, in addition to competitor actions, can impact our strategy to negotiate, renew, or expand service contracts and grow our business. We also encounter competition for acquisitions and growth opportunities. General economic factors and the market for consumer goods, in addition to regulatory developments, can also significantly impact commodity prices for the recyclable materials we sell. Significant components of our operating expenses vary directly as we experience changes in revenue due to volume and inflation. Volume changes
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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.
We believe the Company’s industry-leading asset network and strategic focus on investing in our people and our digital platform will give the Company the necessary tools to address the evolving challenges impacting the Company and our industry. In line with our commitment to continuous improvement and a differentiated customer experience, we remain focused on our automation and optimization investments to enhance our operational efficiency and change the way we interact with our customers. Advancements made through these initiatives are intended to seamlessly and digitally connect all enterprise functions required to service customers and provide the best experience. 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.
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 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. We also allocated $1,472 million of available cash to our shareholders during 2024 through dividends and common stock repurchases.
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Key elements of our 2024 financial results include:
● Revenues of $22,063 million for 2024 compared with $20,426 million in 2023, an increase of $1,637 million, or 8.0%. The increase is primarily attributable to (i) higher yield in our Collection and Disposal businesses; (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. 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 $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 (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 $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 $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; and
● Free cash flow was $2,317 million in 2024, compared with $1,902 million in 2023. 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. Refer to Free Cash Flow below for our definition of free cash flow, additional information about our use of this measure, and a reconciliation to net cash provided by operating activities, which is the most comparable GAAP measure.
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Results of Operations
Operating Revenues
The mix of operating revenues for the years ended December 31 are as follows (in millions):
Net
Intercompany
Gross
Operating
Operating
Operating
Revenues
Revenues(a)(b)
Revenues(b)
Year Ended December 31:
2024
Commercial
$
5,371
$
798
$
6,169
Industrial
3,089
794
3,883
Residential
3,466
89
3,555
Other collection
2,964
230
3,194
Total collection
14,890
1,911
16,801
Landfill
3,445
1,513
4,958
Transfer
1,381
1,067
2,448
Total Collection and Disposal
19,716
4,491
24,207
Recycling Processing and Sales
1,603
287
1,890
WM Renewable Energy
318
3
321
WM Healthcare Solutions
403
10
413
Corporate and Other
23
25
48
Total
$
22,063
$
4,816
$
26,879
2023
Commercial
$
5,109
$
692
$
5,801
Industrial
3,083
753
3,836
Residential
3,378
96
3,474
Other collection
2,786
220
3,006
Total collection
14,356
1,761
16,117
Landfill
3,252
1,479
4,731
Transfer
1,257
1,036
2,293
Total Collection and Disposal
18,865
4,276
23,141
Recycling Processing and Sales
1,264
312
1,576
WM Renewable Energy
273
3
276
Corporate and Other
24
22
46
Total
$
20,426
$
4,613
$
25,039
2022
Commercial
$
4,860
$
590
$
5,450
Industrial
3,025
656
3,681
Residential
3,264
75
3,339
Other collection
2,466
217
2,683
Total collection
13,615
1,538
15,153
Landfill
3,062
1,454
4,516
Transfer
1,166
977
2,143
Total Collection and Disposal
17,843
3,969
21,812
Recycling Processing and Sales
1,516
244
1,760
WM Renewable Energy
312
3
315
Corporate and Other
27
22
49
Total
$
19,698
$
4,238
$
23,936
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(a) Intercompany operating revenues reflect each segment’s total intercompany sales, including intercompany sales within a segment and between segments. Transactions within and between segments are generally made on a basis intended to reflect the market value of the service.
(b) 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):
2024 vs. 2023
2023 vs. 2022
As a % of
As a % of
As a % of
As a % of
Related
Total
Related
Total
Amount
Business(a)
Amount
Company(b)
Amount
Business(a)
Amount
Company(b)
Collection and disposal
$
811
4.5
%
$
911
5.4
%
Recycling Processing and Sales and WM Renewable Energy (c)
271
17.1
(381)
(20.2)
Energy surcharge and mandated fees
(97)
(9.9)
(104)
(9.7)
Total average yield (d)
$
985
4.8
%
$
426
2.1
%
Volume (e)
88
0.4
150
0.8
Internal revenue growth
1,073
5.2
576
2.9
Acquisitions
584
2.9
186
0.9
Divestitures
(8)
—
(5)
—
Foreign currency translation
(12)
(0.1)
(29)
(0.1)
Total
$
1,637
8.0
%
$
728
3.7
%
(a) Calculated by dividing the increase or decrease for the current year by the prior year’s related business revenue adjusted to exclude the impacts of divestitures for the current year.
(b) Calculated by dividing the increase or decrease for the current year by the prior year’s total Company revenue adjusted to exclude the impacts of divestitures for the current year.
(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) 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:
Average Yield
Collection and Disposal Average Yield — This measure reflects the effect on our revenue from the pricing activities of our collection, transfer and landfill operations, exclusive of volume changes. Revenue growth from Collection and Disposal average yield includes not only base rate changes and environmental and service fee fluctuations, but also (i) certain average price changes related to the overall mix of services, which are due to the types of services provided; (ii) changes in average price from new and lost business and (iii) price decreases to retain customers.
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The details of our revenue growth from Collection and Disposal average yield for the year ended December 31 are as follows (dollars in millions):
2024 vs. 2023
2023 vs. 2022
As a % of
As a % of
Related
Related
Amount
Business
Amount
Business
Commercial
$
327
6.2
%
$
321
6.5
%
Industrial
176
5.0
240
7.2
Residential
200
6.2
191
6.1
Total collection
703
5.6
752
6.3
Landfill
54
1.8
76
2.7
Transfer
54
4.5
83
7.5
Total Collection and Disposal
$
811
4.5
%
$
911
5.4
%
Our overall pricing efforts are focused on keeping pace with the increasing costs and capital intensity of our business. 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 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 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 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. These amounts have not significantly impacted the change in revenue for the periods presented.
Volume
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. 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.
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Acquisitions and Divestitures
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
Our operating expenses are comprised of (i) labor and related benefits costs (excluding labor costs associated with maintenance and repairs discussed below), which include salaries and wages, bonuses, related payroll taxes, insurance and benefits costs and the costs associated with contract labor; (ii) transfer and disposal costs, which include tipping fees paid to third-party disposal facilities and transfer stations; (iii) maintenance and repairs costs relating to equipment, vehicles and facilities and related labor costs; (iv) subcontractor costs, which include the costs of independent haulers who transport waste collected by us to disposal facilities and are affected by variables such as volumes, distance and fuel prices; (v) costs of goods sold, which includes the cost to purchase recycling materials for our Recycling Processing and Sales segment, including certain rebates paid to suppliers; (vi) fuel costs, net of tax credits for alternative fuel, which represent the costs of fuel to operate our truck fleet and landfill operating equipment; (vii) disposal and franchise fees and taxes, which include landfill taxes, municipal franchise fees, host community fees, contingent landfill lease payments and royalties; (viii) landfill operating costs, which include interest accretion on landfill liabilities, interest accretion on and discount rate adjustments to environmental remediation liabilities, leachate and methane collection and treatment, landfill remediation costs and other landfill site costs; (ix) risk management costs, which include general liability, automobile liability and workers’ compensation claims programs costs and (x) other operating costs, which include gains and losses on sale of assets, telecommunications, equipment and facility lease expenses, property taxes, utilities and supplies. Variations in volumes year-over-year, as discussed above in Operating Revenues , in addition to cost inflation, affect the comparability of the components of our operating expenses.
The following table summarizes the major components of our operating expenses for the year ended December 31 (dollars in millions and as a percentage of revenues):
2024
2023
2022
Labor and related benefits
$
3,845
17.4
%
$
3,669
18.0
%
$
3,452
17.5
%
Transfer and disposal costs
1,331
6.0
1,273
6.2
1,215
6.2
Maintenance and repairs
2,079
9.4
1,978
9.7
1,835
9.3
Subcontractor costs
2,240
10.2
2,185
10.7
2,006
10.2
Cost of goods sold
1,048
4.7
769
3.8
973
4.9
Fuel
437
2.0
501
2.4
592
3.0
Disposal and franchise fees and taxes
744
3.4
736
3.6
720
3.7
Landfill operating costs
524
2.4
453
2.2
421
2.1
Risk management
351
1.6
320
1.6
348
1.8
Other
784
3.6
722
3.5
732
3.7
$
13,383
60.7
%
$
12,606
61.7
%
$
12,294
62.4
%
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 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,
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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. 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 — 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.
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.
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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.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses consist of (i) labor and related benefits costs, which include salaries, bonuses, related insurance and benefits, contract labor, payroll taxes and equity-based compensation; (ii) professional fees, which include fees for consulting, legal, audit and tax services; (iii) provision for bad debts, which includes allowances for uncollectible customer accounts and collection fees and (iv) other selling, general and administrative expenses, which include, among other costs, facility-related expenses, voice and data telecommunication, advertising, bank charges, computer costs, travel and entertainment, rentals, postage and printing. In addition, the financial impacts of litigation reserves generally are included in our “Other” selling, general and administrative expenses.
The following table summarizes the major components of our selling, general and administrative expenses for the year ended December 31 (dollars in millions and as a percentage of revenues):
2024
2023
2022
Labor and related benefits
$
1,400
6.4
%
$
1,205
5.9
%
$
1,195
6.1
%
Professional fees
358
1.6
228
1.1
268
1.4
Provision for bad debts
51
0.2
56
0.3
50
0.2
Other
455
2.1
437
2.1
425
2.1
$
2,264
10.3
%
$
1,926
9.4
%
$
1,938
9.8
%
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.
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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 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.
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.
Depreciation, Depletion and Amortization Expenses
The following table summarizes the components of our depreciation, depletion and amortization expenses for the year ended December 31 (dollars in millions and as a percentage of revenues):
2024
2023
2022
Depreciation of tangible property and equipment
$
1,292
5.9
%
$
1,197
5.9
%
$
1,155
5.9
%
Depletion of landfill airspace
795
3.6
745
3.6
754
3.8
Amortization of intangible assets
180
0.8
129
0.6
129
0.6
$
2,267
10.3
%
$
2,071
10.1
%
$
2,038
10.3
%
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.
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(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net
The following table summarizes the major components of (gain) loss from divestitures, asset impairments and unusual items, net for the year ended December 31 (in millions):
2024
2023
2022
Gain from divestitures, net
$
(26)
$
—
$
(5)
Asset impairments
90
275
50
Other, net
18
(32)
17
$
82
$
243
$
62
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. This charge was partially offset by the recognition of $46 million of income related to the reversal of a liability for contingent consideration associated with our investment in such business; (ii) $107 million of impairment charges within Corporate and Other for certain investments in waste diversion technology businesses and (iii) a $17 million charge within Corporate and Other to adjust an indirect wholly owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site. Refer to Notes 5 and 10 to the Consolidated Financial Statements for further information.
During the year ended December 31, 2022, we recognized $62 million of net charges consisting of (i) $50 million of asset impairment charges primarily related to management’s decision to close two landfills within our East Tier and (ii) a $17 million charge pertaining to reserves for loss contingencies within Corporate and Other to adjust an indirect wholly owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site, as discussed in Note 10 to the Consolidated Financial Statements. These losses were partially offset by a $5 million gain from the divestiture of a collection and disposal operation in our West Tier.
See Note 2 to the Consolidated Financial Statements for additional information related to the accounting policy and analysis involved in identifying and calculating impairments. See Note 19 to the Consolidated Financial Statements for additional information related to the impact of impairments on the results of operations of our reportable segments.
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Income from Operations
The following table summarizes income from operations for the year ended December 31 (dollars in millions):
Period-to-
Period-to-
Period
Period
2024
Change
2023
Change
2022
Collection and Disposal:
East Tier
$
2,760
$
314
12.8
%
$
2,446
$
268
12.3
%
$
2,178
West Tier
2,693
310
13.0
2,383
201
9.2
2,182
Other Ancillary
(9)
(1)
*
(8)
(8)
*
—
Collection and Disposal
5,444
623
12.9
4,821
461
10.6
4,360
Recycling Processing and Sales
86
130
*
(44)
(172)
*
128
WM Renewable Energy
99
20
25.3
79
(53)
(40.2)
132
WM Healthcare Solutions
(69)
(69)
*
—
—
*
—
Corporate and Other
(1,497)
(216)
16.9
(1,281)
(26)
2.1
(1,255)
Total
$
4,063
$
488
13.7
%
$
3,575
$
210
6.2
%
$
3,365
Percentage of revenues
18.4
%
17.5
%
17.1
%
* Percentage change does not provide a meaningful comparison.
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.
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.
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
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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.
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. 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 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. The losses are more than offset by the tax benefits generated by these investments as further discussed in Notes 8 and 18 to the Consolidated Financial Statements.
Income Tax Expense
We recorded income tax expense of $713 million, $745 million and $678 million in 2024, 2023 and 2022, respectively, resulting in effective income tax rates of 20.6%, 24.7% and 23.2% for the years ended December 31, 2024, 2023 and 2022, respectively. The comparability of our income tax expense for the reported periods has been primarily affected by the following:
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● 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; and
● 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 $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.
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Landfill and Environmental Remediation Discussion and Analysis
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):
2024
2023
Remaining
Remaining
Permitted
Expansion
Total
Permitted
Expansion
Total
Capacity
Capacity
Capacity
Capacity
Capacity
Capacity
Balance as of beginning of year (in tons)
5,211
161
5,372
5,165
190
5,355
Acquisitions, divestitures, newly permitted landfills and closures
—
8
8
—
—
—
Changes in expansions pursued (a)
—
58
58
—
138
138
Expansion permits granted (b)
64
(64)
—
168
(168)
—
Depletable tons received
(125)
—
(125)
(123)
—
(123)
Changes in engineering estimates and other (c)
24
2
26
1
1
2
Balance as of end of year (in tons) (d)
5,174
165
5,339
5,211
161
5,372
Balance as of end of year (in cubic yards) (d)
5,049
165
5,214
5,079
180
5,259
(a) Amounts reflected here relate to the combined impacts of (i) new expansions pursued; (ii) increases or decreases in the airspace being pursued for ongoing expansion efforts; (iii) adjustments for differences between the airspace being pursued and airspace granted and (iv) decreases due to decisions to no longer pursue expansion permits, if any.
(b) We received expansion permits at 11 of our landfills during 2024 and 13 of our landfills during 2023, demonstrating our continued success in working with municipalities and regulatory agencies to expand the disposal airspace of our existing landfills.
(c) Changes in engineering estimates can result in changes to the estimated available remaining airspace of a landfill or changes in the utilization of such landfill airspace, affecting the number of tons that can be placed in the future. Estimates of the amount of waste that can be placed in the future are reviewed annually by our engineers and are based on a number of factors, including standard engineering techniques and site-specific factors such as current and projected mix of waste type; initial and projected waste density; estimated number of years of life remaining; depth of underlying waste; anticipated access to moisture through precipitation or recirculation of landfill leachate and operating practices. We continually focus on improving the utilization of airspace through efforts that may include recirculating landfill leachate where allowed by permit; optimizing the placement of daily cover materials and increasing initial compaction through improved landfill equipment, operations and training.
(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):
2024
2023
# of
Depletable
Tons per
# of
Depletable
Tons per
Sites
Tons
Day
Sites
Tons
Day
Solid waste landfills (a)
257
124,271
456
258
122,141
450
Hazardous waste landfills
5
626
2
5
658
2
262
124,897
458
263
122,799
452
Solid waste landfills closed, divested or lease or other contractual agreement expired during related year
—
113
—
—
125,010
122,799
(a) As of December 31, 2024 and 2023, we had 15 and 17 landfills, respectively, which were not accepting waste.
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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. Many of our landfills have the potential for expanded airspace beyond what is currently permitted. We monitor the availability of permitted airspace at each of our landfills and evaluate whether to pursue an expansion at a given landfill based on estimated future disposal volume, disposal prices, construction and operating costs, remaining airspace and likelihood of obtaining an expansion permit. We are seeking expansion permits at 18 of our landfills that meet the expansion criteria outlined in the Critical Accounting Estimates and Assumptions — Landfills section below. Although no assurances can be made that all future expansions will be permitted or permitted as designed, the weighted average remaining landfill life for all owned or operated landfills is approximately 39 years when considering remaining permitted airspace, expansion airspace and projected annual disposal volume.
The number of landfills owned or operated as of December 31, 2024, segregated by their estimated operating lives based on remaining permitted and expansion airspace and projected annual disposal volume, was as follows:
# of Landfills
0 to 5 years
28
6 to 10 years
22
11 to 20 years
53
21 to 40 years
62
41+ years
97
Total
262
(a)
(a) Of the 262 landfills, 221 are owned, 29 are operated under lease agreements and 12 are operated under other contractual agreements. For the landfills not owned, we are usually responsible for final capping, closure and post-closure obligations.
Landfill Assets — We capitalize various costs that we incur to prepare a landfill to accept waste. These costs generally include expenditures for land (including the landfill footprint and required landfill buffer property), permitting, excavation, liner material and installation, landfill leachate collection systems, landfill gas collection systems, environmental monitoring equipment for groundwater and landfill gas, directly related engineering, capitalized interest, and on-site road construction and other capital infrastructure costs. The cost basis of our landfill assets also includes estimates of future costs associated with landfill final capping, closure and post-closure activities, which are discussed further below.
The changes to the cost basis of our landfill assets and accumulated landfill airspace depletion for the year ended December 31, 2024 are reflected in the table below (in millions):
Accumulated
Net Book
Cost Basis of
Landfill Airspace
Value of
Landfill Assets
Depletion
Landfill Assets
December 31, 2023
$
19,473
$
(11,643)
$
7,830
Capital additions
832
—
832
Asset retirement obligations incurred and capitalized
91
—
91
Depletion of landfill airspace
—
(795)
(795)
Foreign currency translation
(100)
47
(53)
Asset retirements and other adjustments
(23)
132
109
December 31, 2024
$
20,273
$
(12,259)
$
8,014
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
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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. These liabilities are accounted for in accordance with authoritative guidance on accounting for asset retirement obligations and are discussed in Note 2 to the Consolidated Financial Statements. We also have liabilities for the remediation of properties that have incurred environmental damage, which generally was caused by operations or for damage caused by conditions that existed before we acquired operations or a site. We recognize environmental remediation liabilities when we determine that the liability is probable and the cost for the likely remedy can be reasonably estimated.
The changes to landfill and environmental remediation liabilities for the year ended December 31, 2024 are reflected in the table below (in millions):
Environmental
Landfill
Remediation
December 31, 2023
$
2,853
$
209
Obligations incurred and capitalized
91
—
Obligations settled
(136)
(23)
Interest accretion
133
—
Revisions in estimates and interest rate assumptions
121
36
Acquisitions, divestitures and other adjustments
(5)
—
December 31, 2024
$
3,057
$
222
Landfill Operating Costs — The following table summarizes our landfill operating costs for the year ended December 31 (in millions):
2024
2023
2022
Interest accretion on landfill and environmental remediation liabilities
$
133
$
130
$
112
Leachate and methane collection and treatment
230
196
193
Landfill remediation costs and discount rate adjustments to environmental remediation liabilities and recovery assets
18
7
(2)
Other landfill site costs
143
120
118
Total landfill operating costs
$
524
$
453
$
421
Depletion of Landfill Airspace — Depletion of landfill airspace, which is included as a component of depreciation, depletion and amortization expenses, includes the following:
● the depletion of landfill capital costs, including (i) costs that have been incurred and capitalized and (ii) estimated future costs for landfill development and construction required to develop our landfills to their remaining permitted and expansion airspace; and
● the depletion of asset retirement costs arising from landfill final capping, closure and post-closure obligations, including (i) costs that have been incurred and capitalized and (ii) projected asset retirement costs.
Depletion expense is recorded on a units-of-consumption basis, applying cost as a rate per ton. The rate per ton is calculated by dividing each component of the depletable basis of a landfill (net of accumulated depletion) by the number of tons needed to fill the corresponding asset’s remaining permitted and expansion airspace. Landfill capital costs and closure and post-closure asset retirement costs are generally incurred to support the operation of the landfill over its entire operating life and are, therefore, depleted on a per-ton basis using a landfill’s total permitted and expansion airspace. Final capping asset retirement costs are related to a specific final capping event and are, therefore, depleted on a per-ton basis using each discrete final capping event’s estimated permitted and expansion airspace. Accordingly, each landfill has multiple per-ton depletion rates.
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The following table presents our landfill airspace depletion expense on a per-ton basis for the year ended December 31:
2024
2023
2022
Depletion of landfill airspace (in millions)
$
795
$
745
$
754
Tons received, net of redirected waste (in millions)
125
123
125
Average landfill airspace depletion expense per ton
$
6.36
$
6.07
$
6.05
Different per-ton depletion rates are applied at each of our 262 landfills, and per-ton depletion rates vary significantly from one landfill to another due to (i) inconsistencies that often exist in construction costs and provincial, state and local regulatory requirements for landfill development and landfill final capping, closure and post-closure activities and (ii) differences in the cost basis of landfills that we develop versus those that we acquire. Accordingly, our landfill airspace depletion expense measured on a per-ton basis can fluctuate due to changes in the mix of volumes we receive across the Company each year.
Liquidity and Capital Resources
The Company consistently generates annual cash flow from operations that meets and exceeds our working capital needs, allows for payment of our dividends, investment in the business through capital expenditures and tuck-in acquisitions, and funding of strategic sustainability growth investments. We continually monitor our actual and forecasted cash flows, our liquidity and our capital resources, enabling us to plan for our present needs and fund unbudgeted business requirements that may arise during the year. The Company believes that its investment grade credit ratings, diverse investor base, large value of unencumbered assets and modest leverage enable it to obtain adequate financing, and refinance upcoming maturities, as necessary to meet its ongoing capital, operating, strategic and other liquidity requirements. We also have the ability to manage liquidity during periods of significant financial market disruption through temporary modification of our capital expenditure and share repurchase plans.
Summary of Contractual Obligations
The following table summarizes our significant contractual obligations as of December 31, 2024 (other than recorded obligations related to liabilities associated with environmental remediation costs and non-cancelable operating lease obligations, which are discussed further in Notes 3 and 7 to the Consolidated Financial Statements, respectively) and the anticipated effect of these obligations on our liquidity in future years (in millions):
2025
2026
2027
2028
2029
Thereafter
Total
Recorded Obligations:
Final capping, closure and post-closure liabilities (a)
$
177
$
223
$
265
$
197
$
166
$
3,762
$
4,790
Debt payments (b)
2,613
747
2,022
1,969
2,048
14,680
24,079
Unrecorded Obligations:
Interest on debt (c)
928
888
838
736
647
5,168
9,205
Estimated unconditional purchase obligations (d)
274
270
142
96
68
556
1,406
Anticipated liquidity impact as of December 31, 2024
$
3,992
$
2,128
$
3,267
$
2,998
$
2,929
$
24,166
$
39,480
(a) Includes liabilities for final capping, closure and post-closure costs recorded in our Consolidated Balance Sheet as of December 31, 2024, without the impact of discounting and inflation. Our recorded liabilities for final capping, closure and post-closure costs will increase as we continue to place additional tons within the permitted airspace at our landfills.
(b) These amounts represent the scheduled principal payments based on their contractual maturities related to our long-term debt and financing leases, excluding interest. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding our debt obligations.
(c) Interest on our fixed-rate debt was calculated based on contractual rates and interest on our variable-rate debt was calculated based on interest rates as of December 31, 2024. As of December 31, 2024, we had $251 million of accrued interest related to our debt obligations.
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(d) Our obligations represent purchase commitments from which we expect to realize an economic benefit in future periods. We have also made certain guarantees that we do not expect to materially affect our current or future financial position, results of operations or liquidity. See Note 10 to the Consolidated Financial Statements for discussion of the nature and terms of our unconditional purchase obligations and guarantees.
Summary of Cash and Cash Equivalents, Restricted Funds and Debt Obligations
The following is a summary of our cash and cash equivalents, restricted funds and debt balances as of December 31 (in millions):
2024
2023
Cash and cash equivalents
$
414
$
458
Restricted funds:
Insurance reserves
$
385
$
376
Final capping, closure, post-closure and environmental remediation funds
128
119
Other
—
17
Total restricted funds (a)
$
513
$
512
Debt:
Current portion
$
1,359
$
334
Long-term portion
22,541
15,895
Total debt
$
23,900
$
16,229
(a)
As of December 31, 2024 and 2023, $100 million and $90 million, respectively, of these account balances was included in other current assets in our Consolidated Balance Sheets.
Debt — We use long-term borrowings in addition to the cash we generate from operations as part of our overall financial strategy to support and grow our business. We primarily use senior notes and tax-exempt bonds to borrow on a long-term basis, but we also use other instruments and facilities, when appropriate. The components of our borrowings as of December 31, 2024 are described in Note 6 to the Consolidated Financial Statements.
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) $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 $1.4 billion of debt maturing in the next 12 months is classified as current obligations.
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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. The following table summarizes our outstanding letters of credit, categorized by type of facility as of December 31 (in millions):
2024
2023
Revolving credit facility (a)
$
224
$
180
Other letter of credit lines (b)
862
834
$
1,086
$
1,014
(a) As of December 31, 2024 and 2023, we had an unused and available credit capacity of $2.1 billion and $2.5 billion, respectively.
(b) As of December 31, 2024, these other letter of credit lines are uncommitted with terms extending through December 2028.
Guarantor Financial Information
WM Holdings has fully and unconditionally guaranteed all of WMI’s senior indebtedness. WMI has fully and unconditionally guaranteed all of WM Holdings’ senior indebtedness. None of WMI’s other subsidiaries have guaranteed any of WMI’s or WM Holdings’ debt. In lieu of providing separate financial statements for the subsidiary issuer and guarantor (WMI and WM Holdings), we have presented the accompanying supplemental summarized combined balance sheet and income statement information for WMI and WM Holdings on a combined basis after elimination of intercompany transactions between WMI and WM Holdings and amounts related to investments in any subsidiary that is a non-guarantor (in millions):
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December 31,
2024
Balance Sheet Information:
Current assets
$
15
Noncurrent assets
14
Current liabilities
1,367
Noncurrent liabilities:
Advances due to affiliates
15,328
Other noncurrent liabilities
20,140
Year Ended
December 31, 2024
Income Statement Information:
Revenue
$
—
Operating income
(547)
Net loss
(405)
Summary of Cash Flow Activity
The following is a summary of our cash flows for the year ended December 31 (in millions):
2024
2023
2022
Net cash provided by operating activities
$
5,390
$
4,719
$
4,536
Net cash used in investing activities
$
(10,601)
$
(3,091)
$
(3,063)
Net cash provided by (used in) financing activities
$
5,155
$
(1,524)
$
(1,216)
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.
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 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 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 .
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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 $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. 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):
2024
2023
2022
Borrowings :
Commercial paper program
$
12,678
$
17,799
$
6,596
Term loan (a)
5,200
—
1,000
Senior notes
6,650
3,207
992
Tax-exempt bonds
50
300
100
$
24,578
$
21,306
$
8,688
Repayments :
Commercial paper program
$
(12,319)
$
(18,709)
$
(6,664)
Term loan (a)
(5,200)
(1,000)
—
Senior notes
(156)
(500)
(500)
Tax-exempt bonds
(60)
(65)
(71)
Other debt
(135)
(120)
(93)
$
(17,870)
$
(20,394)
$
(7,328)
Net cash borrowings (repayments)
$
6,708
$
912
$
1,360
(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.
● 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. 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.
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● Cash Dividends — For the periods presented, all dividends have been declared by our Board of Directors. Cash dividends declared and paid were $1,210 million in 2024, or $3.00 per common share, $1,136 million in 2023, or $2.80 per common share, and $1,077 million in 2022, or $2.60 per common share.
In December 2024, we announced that our Board of Directors expects to increase the quarterly dividend from $0.75 to $0.825 per share for dividends declared in 2025. However, all future dividend declarations are at the discretion of the Board of Directors and depend on various factors, including our net earnings, financial condition, cash required for future business plans, growth and acquisitions and other factors the Board of Directors may deem relevant.
● 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
We are presenting free cash flow, which is a non-GAAP measure of liquidity, in our disclosures because we use this measure in the evaluation and management of our business. We define free cash flow as net cash provided by operating activities, less capital expenditures, plus proceeds from divestitures of businesses and other assets, net of cash divested. We believe it is indicative of our ability to pay our quarterly dividends, repurchase common stock, fund acquisitions and other investments and, in the absence of refinancings, to repay our debt obligations. Free cash flow is not intended to replace net cash provided by operating activities, which is the most comparable GAAP measure. We believe free cash flow gives investors useful insight into how we view our liquidity, but the use of free cash flow as a liquidity measure has material limitations because it excludes certain expenditures that are required or that we have committed to, such as declared dividend payments and debt service requirements.
Our calculation of free cash flow and reconciliation to net cash provided by operating activities is shown in the table below for the year ended December 31 (in millions), and may not be calculated the same as similarly-titled measures presented by other companies:
2024
2023
2022
Net cash provided by operating activities
$
5,390
$
4,719
$
4,536
Capital expenditures to support the business
(2,281)
(2,131)
(2,026)
Capital expenditures - sustainability growth investments (a)
(950)
(764)
(561)
Total capital expenditures
(3,231)
(2,895)
(2,587)
Proceeds from divestitures of businesses and other assets, net of cash divested
158
78
27
Free cash flow
$
2,317
$
1,902
$
1,976
(a) These growth investments are intended to further our sustainability leadership position by increasing recycling volumes and growing renewable natural gas generation and we expect they will deliver circular solutions for our customers and drive environmental value to the communities we serve.
Critical Accounting Estimates and Assumptions
In preparing our financial statements, we make numerous estimates and assumptions that affect the accounting for and recognition and disclosure of assets, liabilities, equity, revenues and expenses. We must make these estimates and assumptions because certain information that we use is dependent on future events, cannot be calculated with precision from available data or simply cannot be calculated. 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
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acquired in business combinations. Each of these items is discussed in additional detail below and in Note 2 to the Consolidated Financial Statements. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements.
Landfills
Accounting for landfills requires that significant estimates and assumptions be made regarding (i) the cost to construct and develop each landfill asset; (ii) the estimated fair value of final capping, closure and post-closure asset retirement obligations, which must consider both the expected cost and timing of these activities and (iii) the determination of each landfill’s remaining permitted and expansion airspace.
Landfill Costs — We estimate the total cost to develop each of our landfill sites to its remaining permitted and expansion airspace. This estimate includes such costs as landfill liner material and installation, excavation for airspace, landfill leachate collection systems, landfill gas collection systems, environmental monitoring equipment for groundwater and landfill gas, directly related engineering, capitalized interest, on-site road construction and other capital infrastructure costs. Additionally, landfill development includes all land purchases for the landfill footprint and landfill buffer property. 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.
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. The estimates also consider when these costs are anticipated to be paid and factor in inflation and discount rates. Our engineering personnel allocate landfill final capping costs to specific final capping events and the capping costs are depleted as waste is disposed of at the landfill. We review these costs annually, or more often if significant facts change. Changes in estimates, such as timing or cost of construction, for final capping events immediately impact the required liability and the corresponding asset. When the change in estimate relates to a fully consumed landfill, the adjustment to the asset must be depleted immediately through expense. When the change in estimate relates to a final capping event at a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace depletion.
Closure and Post-Closure Costs — We base our estimates for closure and post-closure costs on our interpretations of permit and regulatory requirements for closure and post-closure monitoring and maintenance. The estimates for landfill closure and post-closure costs also consider when the costs are anticipated to be paid and factor in inflation and discount rates. The possibility of changing legal and regulatory requirements and the forward-looking nature of these types of costs make any estimation or assumption less certain. Changes in estimates for closure and post-closure events immediately impact the required liability and the corresponding asset. When the change in estimate relates to a fully consumed landfill, the adjustment to the asset must be depleted immediately through expense. When the change in estimate relates to a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace depletion.
Remaining Permitted Airspace — Our engineers, in consultation with third-party engineering consultants and surveyors, are responsible for determining remaining permitted airspace at our landfills. The remaining permitted airspace is determined by an annual survey, which is used to compare the existing landfill topography to the expected final landfill topography.
Expansion Airspace — We also include currently unpermitted expansion airspace in our estimate of remaining permitted and expansion airspace in certain circumstances. First, for unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, we must believe that obtaining the expansion permit is likely. Second, we must generally expect the initial expansion permit application to be submitted within one year and the final expansion permit to be received within five years, in addition to meeting the following criteria:
● Personnel are actively working on the expansion of an existing landfill, including efforts to obtain land use and local, state or provincial approvals;
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● We have a legal right to use or obtain land to be included in the expansion plan;
● There are no significant known technical, legal, community, business, or political restrictions or similar issues that could negatively affect the success of such expansion; and
● Financial analysis has been completed based on conceptual design, and the results demonstrate that the expansion meets Company criteria for investment.
These criteria are evaluated by our field-based engineers, accountants, managers and others to identify potential obstacles to obtaining the permits. Once the unpermitted airspace is included, our policy provides that airspace may continue to be included in remaining permitted and expansion airspace even if certain of these criteria are no longer met as long as we continue to believe we will ultimately obtain the permit, based on the facts and circumstances of a specific landfill. In these circumstances, continued inclusion must be approved through a landfill-specific review process that includes approval by our Chief Financial Officer on a quarterly basis.
When we include the expansion airspace in our calculations of remaining permitted and expansion airspace, we also include the projected costs for development, as well as the projected asset retirement costs related to final capping, closure and post-closure of the expansion in the depletable basis of the landfill.
Once the remaining permitted and expansion airspace is determined in cubic yards, an airspace utilization factor (“AUF”) is established to calculate the remaining permitted and expansion capacity in tons. The AUF is established using the measured density obtained from previous annual surveys and is then adjusted to account for future settlement. The amount of settlement that is forecasted will consider several site-specific factors including current and projected mix of waste type, initial and projected waste density, estimated number of years of life remaining, depth of underlying waste, anticipated access to moisture through precipitation or recirculation of landfill leachate and operating practices. In addition, the initial selection of the AUF is subject to a subsequent multi-level review by our engineering group and the AUF used is reviewed on a periodic basis and revised as necessary. Our historical experience generally indicates that the impact of settlement at a landfill is greater later in the life of the landfill when the waste placed at the landfill approaches its highest point under the permit requirements.
After determining the costs and remaining permitted and expansion capacity at each of our landfills, we determine the per ton rates that will be expensed as waste is received and deposited at the landfill by dividing the costs by the corresponding number of tons. We calculate per ton depletion rates for each landfill for assets associated with each final capping event, for assets related to closure and post-closure activities and for all other costs capitalized or to be capitalized in the future. These rates per ton are updated annually, or more often, as significant facts change.
It is possible that actual results, including the amount of costs incurred, the timing of final capping, closure and post-closure activities, our airspace utilization or the success of our expansion efforts could ultimately turn out to be significantly different from our estimates and assumptions. To the extent that such estimates, or related assumptions, prove to be significantly different than actual results, lower earnings may be experienced due to higher depletion rates or higher expenses; or higher earnings may result if the opposite occurs. Most significantly, if it is determined that expansion capacity should no longer be considered in calculating the recoverability of a landfill asset, we may be required to recognize an asset impairment or incur significantly higher depletion expense. If at any time management makes the decision to abandon the expansion effort, the capitalized costs related to the expansion effort are expensed immediately.
Environmental Remediation Liabilities
A significant portion of our operating costs and capital expenditures could be characterized as costs of environmental protection. The nature of our operations, particularly with respect to the construction, operation and maintenance of our landfills subjects us to an array of laws and regulations relating to the protection of the environment. Under current laws and regulations, we may have liabilities for environmental damage caused by our operations, or for damage caused by conditions that existed before we acquired a site. In addition to remediation activity required by state or local authorities, such liabilities include potentially responsible party (“PRP”) investigations. The costs associated with these liabilities can include settlements, certain legal and consultant fees, as well as incremental internal and external costs directly associated with site investigation and clean up.
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Where it is probable that a liability has been incurred, we estimate costs required to remediate sites based on site-specific facts and circumstances. We routinely review and evaluate sites that require remediation and determine our estimated cost for the likely remedy based on a number of estimates and assumptions. Next, we review the same type of information with respect to other named and unnamed PRPs. Estimates of the costs for the likely remedy are then either developed using our internal resources or by third-party environmental engineers or other service providers. Internally developed estimates are based on:
● Management’s judgment and experience in remediating our own and unrelated parties’ sites;
● Information available from regulatory agencies as to costs of remediation;
● The number, financial resources and relative degree of responsibility of other PRPs who may be liable for remediation of a specific site; and
● The typical allocation of costs among PRPs, unless the actual allocation has been determined.
Refer to Note 10 to the Consolidated Financial Statements for additional information on our environmental liabilities.
Fair Value of Nonfinancial Assets and Liabilities
Significant estimates are made in determining the fair value of long-lived tangible and intangible assets (i.e., property and equipment, intangible assets and goodwill) during the impairment evaluation process. In addition, the majority of assets acquired and liabilities assumed in a business combination are required to be recognized at fair value under the relevant accounting guidance.
Fair value is computed using several factors, including projected future operating results, economic projections, anticipated future cash flows, comparable marketplace data and the cost of capital. There are inherent uncertainties related to these factors and to our judgment in applying them in our analysis. However, we believe our methodology for estimating the fair value of our reporting units is reasonable.
Property and Equipment, Including Landfills and Definite-Lived Intangible Assets — We monitor the carrying value of our long-lived assets for potential impairment on an ongoing basis and test the recoverability of such assets generally using significant unobservable (“Level 3”) inputs whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. These events or changes in circumstances, including management decisions pertaining to such assets, are referred to as impairment indicators. If an impairment indicator occurs, we perform a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. If cash flows cannot be separately and independently identified for a single asset, we will determine whether an impairment has occurred for the group of assets for which we can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset or asset group to its carrying value and the difference is recorded in the period that the impairment indicator occurs. Fair value is generally determined by considering (i) internally developed discounted projected cash flow analysis of the asset or asset group; (ii) third-party valuations and/or (iii) information available regarding the current market for similar assets. Estimating future cash flows requires significant judgment and projections may vary from the cash flows eventually realized, which could impact our ability to accurately assess whether an asset has been impaired.
The assessment of impairment indicators and the recoverability of our capitalized costs associated with landfills and related expansion projects require significant judgment due to the unique nature of the waste industry, the highly regulated permitting process and the sensitive estimates involved. During the review of a landfill expansion application, a regulator may initially deny the expansion application although the expansion permit is ultimately granted. In addition, management may periodically divert waste from one landfill to another to conserve remaining permitted landfill airspace, or a landfill may be required to cease accepting waste, prior to receipt of the expansion permit. However, such events occur in the ordinary course of business in the waste industry and do not necessarily result in impairment of our landfill assets because, after consideration of all facts, such events may not affect our belief that we will ultimately obtain the expansion permit. As a result, our tests of recoverability, which generally make use of a probability-weighted cash flow estimation approach, may indicate that no impairment loss should be recorded.
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Indefinite-Lived Intangible Assets, Including Goodwill — At least annually using a measurement date of October 1, and more frequently if warranted, we assess the indefinite-lived intangible assets including the goodwill of our reporting units for impairment using Level 3 inputs.
We first perform a qualitative assessment to determine if it was more likely than not that the fair value of a reporting unit is less than its carrying value. If the assessment indicates a possible impairment, we complete a quantitative review, comparing the estimated fair value of a reporting unit to its carrying amount, including goodwill. An impairment charge is recognized if the asset’s estimated fair value was less than its carrying amount. Fair value is typically estimated using an income approach using Level 3 inputs. However, when appropriate, we may also use a market approach. The income approach is based on the long-term projected future cash flows of the reporting units. We discount the estimated cash flows to present value using a weighted average cost of capital that considers factors such as market assumptions, the timing of the cash flows and the risks inherent in those cash flows. We believe that this approach is appropriate because it provides a fair value estimate based upon the reporting units’ expected long-term performance considering the economic and market conditions that generally affect our business. The market approach estimates fair value by measuring the aggregate market value of publicly-traded companies with similar characteristics to our business as a multiple of their reported earnings. 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.
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. When we are in the process of valuing all of the assets and liabilities acquired in an acquisition, there can be subsequent adjustments to our estimates of fair value and resulting preliminary purchase price allocation. Generally, the valuation of our acquired asset and liabilities rely on complex estimates and assumptions.
Acquisition-date fair value estimates are revised as necessary if, and when, additional information regarding these contingencies becomes available to further define and quantify assets acquired and liabilities assumed. Subsequent to finalization of purchase accounting, these revisions are accounted for as adjustments to income from operations. All acquisition-related transaction costs are expensed as incurred. See Note 17 to the Consolidated Financial Statements for additional information related to our acquisitions.
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net . See Note 11 to the Consolidated Financial Statements for additional information related to Asset Impairments and Unusual Items.
Inflation
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. 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.
Refer to Item 1A. Risk Factors for further discussion.