What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-29 compared with 2024-10-28 · 192 added, 233 removed, 204 unchanged (68% of the section changed)

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This Quarterly Report on Form 10-Q contains certain forward-looking statements that are made subject to the safe harbor protections provided by the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are often identified by the words, “will,” “may,” “should,” “continue,” “anticipate,” “believe,” “expect,” “target,” “plan,” “forecast,” “project,” “estimate,” “intend,” and words of a similar nature and include estimates or projections of financial and other data;

Forward-looking statements are often identified by the words, “will,” “may,” “should,” “continue,” “anticipate,” “believe,” “expect,” “plan,” “forecast,” “project,” “estimate,” “intend,” and words of a similar nature and include estimates or projections of financial and other data;

comments on expectations relating to future periods;

plans or objectives for the future;

and statements of opinion, view or belief about current and future events, circumstances or performance.

and statements of opinions, views or beliefs about current and future events, circumstances or performance.

You should view these statements with caution.

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These forward looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those set forth in such forward-looking statements, including but not limited to failure to implement our optimization, automation, growth and cost savings initiatives and overall business strategy;

failure to obtain the results anticipated from strategic initiatives, investments, acquisitions, including the pending Stericycle acquisition, or new lines of business;

failure to identify acquisition targets, consummate and integrate acquisitions, including our planned integration of Stericycle;

our ability to consummate and finance the Stericycle acquisition and achieve the anticipated benefits therefrom, including cost synergies;

legal, regulatory and other matters that may affect the costs and timing of our ability to complete, integrate and deliver all of the expected benefits of the pending Stericycle acquisition;

failure to obtain the results anticipated from strategic initiatives, investments, acquisitions or new lines of business;

failure to identify acquisition targets, consummate and integrate acquisitions, including our ability to integrate the acquisition of Stericycle and achieve the anticipated benefits therefrom, including synergies;

legal, regulatory and other matters that may affect the costs and timing of our ability to integrate and deliver all of the expected benefits of the Stericycle acquisition;

failure to maintain an effective system of internal control over financial reporting;

existing or new environmental and other regulations, including developments related to emerging contaminants, gas emissions, renewable energy, extended producer responsibility and our natural gas fleet;

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diminishing landfill capacity, resulting in increased costs and the need for disposal alternatives;

exposure to different regulatory, legal, financial and economic conditions in international jurisdictions;

failure to attract, hire and retain key team members and a high quality workforce;

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pricing actions;

impacts from international trade restrictions;

impacts from international trade restrictions and tariffs;

competitive disposal alternatives, diversion of waste from landfills and declining waste volumes;

weakness in general economic conditions and capital markets, including potential for an economic recession;

changing conditions in the healthcare industry;

weakness in general economic conditions and capital markets;

instability of financial institutions;

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failure of technology to perform as expected;

failure to prevent, detect and manage cybersecurity incidents or comply with privacy regulations;

failure to prevent, detect and address cybersecurity incidents or comply with privacy regulations;

inability to adapt and manage the benefits and risks of artificial intelligence;

negative outcomes of litigation or governmental proceedings, including those acquired through transactions, including the pending Stericycle acquisition;

and operations or management decisions or developments that result in impairment charges and other risks discussed in our filings with the SEC, including Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, as updated by Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024.

negative outcomes of litigation or governmental proceedings, including those acquired through transactions;

and operational or management decisions or developments that result in impairment charges and other risks discussed in our filings with the SEC, including Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024.

We assume no obligation to update any forward-looking statement, including financial estimates and forecasts, whether as a result of future events, circumstances or developments or otherwise.

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We own or operate the largest network of landfills throughout the U.S.

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

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

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

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

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

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

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

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

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

(iii) Recycling Processing and Sales;

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

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

We also provide additional services not managed through our five reportable segments, which are presented as Corporate and Other.

Stericycle Acquisition

On November 4, 2024, we completed our acquisition of all outstanding shares of Stericycle, Inc., a provider of regulated waste and compliance services and secure information destruction services that protect people and brands, promote health and well-being and safeguard the environment.

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

During the first quarter of 2025, we prioritized maintaining service delivery continuity for our customers, ensuring business alignment with WM’s core values and capturing preliminary synergies through reduction of duplicative processes and costs.

Additional integration efforts focused on optimizing processes through technological enhancements, establishing a performance management approach aimed at accountability and improving utilization and optimization of the asset portfolio.

Our fundamental strategy has not changed;

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We believe that focused differentiation, which is driven by capitalizing on our unique and extensive network of assets, will deliver profitable growth and position us to leverage competitive advantages.

Simultaneously, we believe that investing in automation to improve processes and drive operational efficiency combined with a focus on the cost to serve our customer will yield an attractive profit margin and enhanced service quality.

We are furthering our strategy of focused differentiation and continuous improvement beyond our traditional waste operations through our sustainability growth strategy that includes significant planned investments in our WM Renewable Energy and Recycling Processing and Sales segments, while increasing automation and reducing labor dependency.

We are also evaluating and pursuing emerging diversion technologies that may generate additional value.

The Company continually evaluates potential acquisitions that provide the opportunity for strategic growth.

On June 3, 2024, we announced that we have entered into an Agreement and Plan of Merger (the “Merger Agreement”) to acquire all outstanding shares of Stericycle, Inc.

(“Stericycle”) for $62.00 per share in cash, representing a total enterprise value of approximately $7.2 billion when including approximately $1.4 billion of Stericycle’s net debt.

Stericycle is a U.S.

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

Stericycle serves customers in North America and Europe.

We believe that the pending Stericycle acquisition will expand the Company’s comprehensive environmental solutions in the growing healthcare market while advancing the Company’s sustainability commitments.

Simultaneously, we believe that investing in automation to improve processes and drive operational efficiency combined with a focus on the cost to serve our customers will yield an attractive profit margin and enhanced service quality.

We are furthering our strategy of focused differentiation and continuous improvement beyond our traditional waste operations through our sustainability growth strategy that includes significant investments in our WM Renewable Energy and Recycling Processing and Sales segments, while increasing automation and reducing labor dependency.

In addition, with our acquisition of Stericycle, we have advanced our growth strategy and built upon our sustainability initiatives.

The acquisition provides a complementary business platform in regulated waste and compliance services involving medical waste, a sector with attractive near- and long-term growth dynamics and in secure information destruction services to further our leading suite of comprehensive waste and environmental solutions.

Furthermore, we are also evaluating and pursuing emerging diversion technologies that may generate additional value.

Business Environment

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

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

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

of waste at landfills.

We monitor these developments to adapt our service offerings.

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

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

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.

This includes expanding traditional recycling services, increasing organics collection and processing, providing regulated waste and compliance services and secure information destruction 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 https://sustainability.wm.com but it does not constitute a part of, and is not incorporated by reference into, this Quarterly Report on Form 10-Q.

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 Quarterly Report on Form 10-Q.

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.

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

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 for certain high-turnover positions, particularly in customer experience, recycling and residential collection, while further elevating our customer self-service through digitalization and implementation of technologies to enhance the safety, reliability and efficiency within our collection operations.

We 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 nicely in 2024 from the low levels experienced in 2023, commodity values are still below prices seen at the beginning of 2022.

In our WM Renewable Energy segment, while the impacts of fluctuations are not currently material, the impact of fluctuations in the prices of electricity, Renewable Identification Numbers (“RINs”) and Renewable Energy Credits (“RECs”) could be significant as the segment continues to grow.

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.

During the first quarter, we experienced moderate decreases in the market price for recycled commodities when compared to the prior year period.

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 downside risk of changes in commodity prices.

Variability i n 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 Quarter Financial Results

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

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

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

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

During the first quarter of 2025, we continued to focus on our priorities to advance our strategy – enhancing employee engagement, permanently reducing our cost to serve our customers through the use of technology and automation, investing in growth through our Recycling Processing and Sales and WM Renewable Energy segments and integrating the Stericycle business.

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.

During the third quarter of 2024, we allocated $781 million of available cash to capital expenditures and $301 million to our shareholders through dividends.

Key elements of our financial results for the third quarter include:

● Revenues of $5,609 million, compared with $5,198 million in the prior year period, an increase of $411 million, or 7.9%.

The increase is primarily attributable to higher yield in our Collection and Disposal businesses and an increase in market value for recycled commodities;

● Operating expenses of $3,399 million, or 60.6% of revenues, compared with $3,188 million, or 61.3% of revenues, in the prior year period.

The $211 million increase in operating expenses is primarily attributable to (i) higher recycling rebates from an increase in the market value for the commodities we process;

(ii) annual employee wage increases and higher incentive compensation;

(iii) our recent acquisition of a solid waste and recycling company in New York;

(iv) an increase in landfill operating costs largely due to wet weather driving leachate costs higher;

(v) an increase in volumes in our Strategic Business Solutions (“WMSBS”) business, which increases our subcontractor costs, and (vi) an increase in risk management costs.

These increases were offset in part by (i) lower diesel fuel prices and (ii) improved operating efficiency and cost control initiatives in our Collection and Disposal businesses.

Although our operating expenses increased overall, efficiency gains, improved employee retention, and momentum in truck deliveries, positioned us to significantly reduce our operating expenses as a percentage of revenue when compared to the third quarter of 2023;

As part of the integration of Stericycle, which constitutes our new WM Healthcare Solutions segment, we achieved synergies by reducing costs of duplicative business processes, focused on service delivery for our customers and aligned team members and business processes with WM’s core values.

Key elements of our financial results for the first quarter include:

● Revenues were $6,018 million compared with $5,159 million in the prior year period, an increase of $859 million, or 16.7%.

The increase is primarily attributable to (i) the acquisition of Stericycle;

(ii) higher yield in our Collection and Disposal businesses;

(iii) tuck-in collection and disposal acquisitions and (iv) higher volumes in our landfill, recycling and WM Renewable Energy businesses, which were partially offset by lower industrial and residential collection volumes;

● Operating expenses were $3,647 million, or 60.6% of revenues, compared with $3,140 million, or 60.9% of revenues, in the prior year period.

The $507 million increase is primarily attributable to (i) the impact of our recent acquisitions and (ii) inflationary impacts.

These increases were offset in part by (i) lower industrial and residential collection volumes and (ii) improved operating efficiency and cost control initiatives in our Collection and Disposal businesses;

● Selling, general and administrative expenses were $687 million, or 11.4% of revenues, compared with $491 million, or 9.5% of revenues, in the prior year period.

The $55 million increase is primarily attributable to (i) increased labor costs from higher annual and long-term incentive compensation costs and annual wage increases and (ii) increased professional fees to support strategic initiatives, including our pending acquisition of Stericycle.

We focus on optimizing our costs and managing discretionary spending in order to drive continuous improvement in these costs as a percentage of revenue.

The increase in this measure in the current quarter is entirely attributable to transaction and advisory costs incurred to support the pending acquisition of Stericycle;

The $196 million increase is primarily attributable to (i) the impact of our Stericycle acquisition and related integration costs and (ii) increased labor costs due to higher annual long-term incentive compensation costs and annual wage increases for our employees;

● Income from operations was $1,013 million, or 16.8% of revenues, compared with $1,016 million, or 19.7% of revenues, in the prior year period.

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

● Net cash provided by operating activities was $1,358 million compared with $1,263 million in the prior year period, with the increase driven by higher earnings in our Collection and Disposal businesses, which were partially offset by (i) unfavorable changes in working capital and (ii) higher cash interest payments;

We achieved $49 million of growth in income from operations of the Collection and Disposal businesses, but that growth was more than offset by an increase in our Corporate and Other costs, which can largely be attributed to Stericycle acquisition and integration costs, and an increase in depreciation and amortization as a result of the Stericycle acquisition;

● Net income attributable to Waste Management, Inc.

was $637 million, or $1.58 per diluted share, compared with $708 million, or $1.75 per diluted share, in the prior year period.

Net income decreased $71 million primarily due to an increase in interest expense as a result of additional debt incurred to fund our acquisition of Stericycle and to a lesser extent a decrease in income from operations, discussed above.

These decreases were partially offset by a reduction in income tax expense of $11 million, or $0.03 per diluted share.

● Net cash provided by operating activities was $1,208 million compared with $1,367 million in the prior year period, with the decrease driven by (i) higher cash interest primarily due to additional debt incurred to fund our acquisition of Stericycle;

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

This decrease was partially offset by higher earnings across all segments, including the contributions from our recent acquisitions.

● Free cash flow was $475 million compared with $714 million in the prior year period.

Free cash flow was relatively flat on a year-over-year basis despite the significant increase in net cash provided by operating activities discussed above due to higher capital expenditures in the current year.

The increase in capital expenditures was planned and is to support the growth of our business.

The decrease in free cash flow is attributable to the decrease in net cash provided by operating activities discussed above as well as an increase in capital spending, which was driven by (i) investments in capital assets such as trucks, landfills and equipment and (ii) capital expenditures within our WM Healthcare Solutions segment to support the business.

These decreases were partially offset by proceeds from the divestiture of non-strategic assets and 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.

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.

Results of Operations

Operating Revenues

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

Three Months Ended September 30:

Other collection

Total collection

Total Collection and Disposal

Recycling Processing and Sales

WM Renewable Energy

Corporate and Other

Other collection

Total collection

Total Collection and Disposal

Recycling Processing and Sales

WM Renewable Energy

Corporate and Other

Nine Months Ended September 30:

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

Revenues (a)(b)

Other collection

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WM Renewable Energy

WM Healthcare Solutions

Corporate and Other

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

(b) Beginning with the 2024 Form 10-K, the Company adjusted gross and intercompany operating revenues to reflect the 15% royalty paid by WM Renewable Energy to our Collection and Disposal and Corporate and Other businesses for the purchase of landfill gas.

There was no change to net operating revenues.

Prior periods have been recast to conform to current presentation.

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

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Three Months Ended

September 30, 2024 vs.

Period-to-Period Change for the

Nine Months Ended

September 30, 2024 vs.

March 31, 2025 vs.

Collection and Disposal

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

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

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

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

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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.

Collection and Disposal Average Yield — This measure reflects the effect on our revenues 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;

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Period-to-Period Change for the

Three Months Ended

Nine Months Ended

September 30, 2024 vs.

March 31, 2025 vs.

Total collection

Total Collection and Disposal

Our overall pricing efforts are focused on keeping pace with the increasing costs and capital needs of our business.

Average yield growth in our collection line of business was 5.1% and 5.6% for the three and nine months ended September 30, 2024, respectively.

We are also continuing to see growth in our disposal business with average yield in our municipal solid waste business of 3.1% and 3.2% for the three and nine months ended September 30, 2024, respectively.

Recycling Processing and Sales and WM Renewable Energy — Recycling Processing and Sales revenues attributable to yield increased $102 million and $219 million for the three and nine months ended September 30, 2024, as compared with prior year periods.

Average market prices for single-stream recycled commodities increased approximately 75% and nearly 65% for the three and nine months ended September 30, 2024, respectively, as compared with the prior year periods.

Yield from the WM Renewable Energy segment increased $6 million and $17 million for the three and nine months ended September 30, 2024, respectively, as compared with the prior year periods, primarily driven by increases in RINs values.

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

Energy Surcharge and Mandated Fees — These fees, which include our energy surcharge program and other mandated fees, decreased $19 million and $55 million for the three and nine months ended September 30, 2024, respectively, as compared with the prior year periods.

Our energy surcharge incorporates market prices for both diesel and CNG.

The decrease in energy surcharge revenues is primarily due to a decline of nearly 15% and nearly 10% in market prices for diesel fuel for the three and nine months ended September 30, 2024, respectively, 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 three and nine months ended September 30, 2024, respectively, as compared with the prior year periods.

Our revenues from volume (excluding volumes from acquisitions and divestitures) increased $70 million and $75 million for the three and nine months ended September 30, 2024, respectively, as compared with the prior year periods.

Volume increases have been generated by our WMSBS business due to our continued focus on a differentiated service model for national accounts customers, special waste and municipal solid waste tons at our landfills, an increase in recycling activity, and our commercial collection business.

These increases were partially offset by a decline in our industrial and residential collection volumes.

Furthermore, our construction and demolition landfill volumes for the nine months ended September 30, 2024, declined as compared to prior year due to clean-up efforts in our East Tier from Hurricane Ian in the prior year.

Our overall pricing efforts are focused on keeping pace with the increasing costs and capital intensity of our business.

We continue to see yield growth in our landfill business primarily driven by municipal solid waste landfills, which achieved average yield of 4.0% for the first quarter of 2025.

Recycling Processing and Sales and WM Renewable Energy — Recycling Processing and Sales revenues attributable to yield decreased $7 million in the first quarter of 2025 as compared with the prior year period.

This decline was driven by 10% lower average market prices in our brokerage business compared with the prior year, partially offset by 5% higher average market prices for our single-stream recycled commodities.

In addition, revenues attributable to yield in our WM Renewable Energy segment increased $8 million as compared with the prior year period, primarily driven by an increase in electricity and natural gas prices due in part to extreme winter weather in the current quarter, which was partially offset by lower RINs pricing.

While there may be short-term fluctuations in our commodity-driven businesses as prices change, we continue to take proactive steps to adjust our business models to protect against the downside risk of changes in commodity prices.

Energy Surcharge and Mandated Fees — These fees decreased $2 million for the first quarter of 2025 as compared with the prior year period.

Our energy surcharge revenues declined $9 million primarily due to a decline in the market prices for diesel fuel of approximately 8.5% in the first quarter of 2025 as compared with the prior year period.

This decline was partially offset by a $7 million increase in our mandated fees primarily related to fees and taxes assessed by various state, county and municipal government agencies at our landfills and transfer stations, particularly in our West Tier.

Our revenues from volume (excluding volumes from acquisitions and divestitures) increased $4 million for the first quarter of 2025 as compared with the prior year period.

Special waste volume in our West Tier was favorably impacted by the wildfires clean-up activities that began in the first quarter of 2025.

Additionally, volumes increased in both our Recycling Processing and Sales and WM Renewable Energy segments primarily due to contributions from growth projects.

These volume increases were largely offset by declines in industrial and residential collection volume as well as the impacts of one fewer workday and extreme winter weather in the current quarter.

Industrial collection volume declined primarily due to lower contributions from temporary business and residential collection volume declined largely due to our intentional shedding of lower-margin business.

Acquisitions and Divestitures

Acquisitions and divestitures resulted in a net increase in revenues of $690 million, or 13.4%, in the first quarter of 2025 as compared with the prior year.

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

The remaining increase was related to our ongoing investment in tuck-in collection and disposal businesses.

Operating Expenses

The following table summarizes the major components of our operating expenses (in millions of dollars and as a percentage of revenues):

Three Months Ended

Nine Months Ended

September 30,

The following table summarizes the major components of our operating expenses for the three months ended March 31 (in millions of dollars and as a percentage of revenues):

Labor and related benefits

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Risk management

Our operating expenses for the three months ended March 31, 2025 increased as compared with the three months ended March 31, 2024, primarily due to (i) our recent acquisitions and (ii) moderate inflationary pressures.

These increases were offset, in part, by (i) lower residential and industrial volumes attributable, in part, to intentional shedding of lower margin residential contracts, industrial economic softness and one less workday as compared with the first quarter of 2024 and (ii) continued operating efficiency and cost control initiatives in our Collection and Disposal businesses.

Although our operating expenses increased overall, efficiency gains, improved turnover and momentum in truck deliveries combined with the benefit of price increases positioned us to reduce our operating expenses as a percentage of revenue when compared with the prior year period.

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

Labor and Related Benefits — We have been driving optimization in these costs through technology that drives route optimization, improved driver retention, and efficiency.

The increase in labor and related benefits costs for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was primarily driven by (i) annual employee wage increases and higher incentive compensation;

(ii) our recent acquisition of a solid waste and recycling company in New York, and (iii) higher employee benefits costs.

For the first six months of 2024, labor and related benefit costs decreased as compared to the prior year periods because of efficiency gains and improved driver retention.

While these productivity and operational efficiency gains continued to provide benefits in the third quarter, they were more than offset by the increases described above.

Transfer and Disposal Costs — The increase in transfer and disposal costs 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) our recent acquisition of a solid waste and recycling company in New York.

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

Maintenance and Repairs — The increase in maintenance and repairs costs was primarily driven by (i) inflationary and acquisition related cost increases for parts, supplies and third-party services, although the impact of inflationary cost increases has moderated from the high levels observed during the first half of 2023 and (ii) annual wage increases and higher technician headcount.

These cost increases were offset, in part, by an improvement in new truck deliveries, which lowered average fleet age and reduced demand for third-party services, parts and supplies and has resulted in improvements in operational efficiencies.

Subcontractor Costs — The increase in subcontractor costs 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 and (ii) continued inflationary cost increases, particularly labor costs from third-party haulers although this impact has moderated from the high levels observed during the first half of 2023.

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

Cost of Goods Sold — The increase in cost of goods sold was primarily driven by an approximate 75% and 65% increase in single-stream recycling commodity prices for the three and nine months ended September 30, 2024, respectively, as compared to the prior year periods.

Fuel — The decrease in fuel costs was primarily due to a decrease of nearly 15% and nearly 10% in market prices for diesel fuel during the three and nine months ended September 30, 2024, respectively, as compared to the prior year periods.

Disposal and Franchise Fees and Taxes — The increase in disposal and franchise fees and taxes 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.

Landfill Operating Costs — The increase in landfill operating costs was primarily due to (i) leachate collection and treatment which can largely be attributed to particularly wet weather in certain markets throughout 2024;

(ii) methane collection and treatment and (iii) site maintenance.

Risk Management — Risk management costs increased primarily due to higher auto and workers compensation claims costs and increases in premiums for property coverage.

Additionally, for the nine months ended September 30, 2024, costs increased due to adjustments to our reserves for certain large loss claims offset, in part, by current year insurance recoveries for property claims associated with a hurricane in 2023.

Labor and Related Benefits — The increase in labor and related benefits costs was largely driven by (i) the addition of employees as a result of our recent acquisitions and (ii) annual employee wage increases.

The increase was offset, in part, by residential collection efficiency improvements, improved driver retention and conversion to automated side-load routes.

Transfer and Disposal Costs — The increase in transfer and disposal costs was primarily due to additional disposal costs attributable to our recent acquisitions and inflationary cost pressures, which includes increased disposal fees at third-party sites and higher rates from our third-party haulers.

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

Maintenance and Repairs — The increase in maintenance and repairs costs was largely driven by (i) additional costs incurred as a part of our recent acquisitions;

(ii) inflation in parts, supplies and third-party services and (iii) annual employee wage increases.

These increases were offset, in part, by new truck deliveries, which lowered average fleet age and reduced demand for third-party services, parts and supplies.

Subcontractor Costs — The increase in subcontractor costs was primarily due to (i) additional costs incurred as a part of our recent acquisitions and (ii) continued inflationary cost pressures, particularly labor costs from third-party haulers.

These increases were offset, in part, by the impact of lower fuel prices on third-party subcontracted hauling and services as compared with the three months ended March 31, 2024.

Cost of Goods Sold — The increase in cost of goods sold was primarily driven by (i) additional pipeline costs attributable to new RNG facilities brought on-line since the first quarter of 2024 and (ii) a 5% increase in recycled commodity prices compared to the prior year period.

Fuel — The increase in fuel costs was primarily due to (i) our recent acquisitions and (ii) the expiration of the federal alternative fuel tax credit on December 31, 2024.

These increases were offset, in part, by an 8.5% decrease in market prices for diesel fuel.

Disposal and Franchise Fees and Taxes — The increase in disposal and franchise fees and taxes was primarily driven by increased landfill volumes in our West Tier.

Landfill Operating Costs — The decrease in landfill operating costs was primarily due to certain adjustments to increase our environmental remediation reserve during the first quarter of 2024.

Risk Management — Risk management costs increased primarily due (i) additional claims and premiums attributable to our recent acquisitions and (ii) increases in claims costs due to negative claim development from prior accident years.

Other — Other operating cost increases were primarily due to (i) additional expenses attributable to our recent acquisitions and, to a much lesser extent, (ii) increased utility costs largely attributable new RNG plants brought on-line since the first quarter of 2024 and increased power prices.

Selling, General and Administrative Expenses

The following table summarizes the major components of our selling, general and administrative expenses (in millions of dollars and as a percentage of revenues):

Three Months Ended

Nine Months Ended

September 30,

The following table summarizes the major components of our selling, general and administrative expenses for the three months ended March 31 (in millions of dollars and as a percentage of revenues):

Labor and related benefits

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Provision for bad debts

Selling, general and administrative expenses increased for the three and nine months ended September 30, 2024 primarily due to (i) increased labor costs from higher annual and long-term incentive compensation costs, and annual wage increases and (ii) increased professional fees to support strategic initiatives, including our pending acquisition of Stericycle.

Partially offsetting these increases was a decline in litigation costs.

Selling, general and administrative expenses have increased primarily due to higher labor costs from acquisitions as well as consulting costs incurred to support the integration of Stericycle.

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

Labor and Related Benefits — The increase in labor and related benefits costs was primarily related to (i) our recent acquisitions, particularly Stericycle;

(ii) higher long-term incentive compensation costs;

(iii) increased headcount and (iv) annual employee wage increases.

Professional Fees —The increase in professional fees was primarily attributable to our acquisition of Stericycle, including integration, business optimization and system development costs.

Provision for Bad Debts —The increase in provision for bad debts was primarily attributable to our Stericycle acquisition.

Depreciation, Depletion and Amortization Expenses

The following table summarizes the components of our depreciation, depletion and amortization expenses (in millions of dollars and as a percentage of revenues):

Three Months Ended

Nine Months Ended

September 30,

The following table summarizes the components of our depreciation, depletion and amortization expenses for the three months ended March 31 (in millions of dollars and as a percentage of revenues):

Depreciation of tangible property and equipment

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Amortization of intangible assets

The increase in depreciation of tangible property and equipment for the three and nine months ended September 30, 2024 as compared to prior year periods was primarily driven by accelerated investments in capital assets such as trucks, digital assets, and upgraded facilities and equipment.

The increase in depletion of landfill airspace for the three and nine months ended September 30, 2024 as compared to the prior year period, 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.

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

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

The nine months ended September 30, 2024 include a $54 million charge required to increase the estimated fair value of a liability associated with the expected disposition of an investment the Company holds in a waste diversion technology business recorded during the second quarter of 2024.

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

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

The increase in depreciation of tangible property and equipment during the first quarter of 2025, as compared with the first quarter of 2024, was driven by (i) our recent acquisitions and (ii) investments in capital assets such as trucks, landfills and equipment.

The increase in depletion of landfill airspace was driven by volume increases, particularly at sites within our West Tier.

The increase in amortization of intangible assets during the first quarter of 2025, as compared with the first quarter of 2024, was primarily driven by the amortization of customer relationships and other intangibles acquired as part of the Stericycle acquisition.

Restructuring

The increase in restructuring during the first quarter of 2025, as compared with the first quarter of 2024, was primarily driven by employee costs related to our acquisition of Stericycle.

Income from Operations

The following table summarizes income from operations for our reportable segments (dollars in millions):

Three Months Ended

Nine Months Ended

September 30,

Period-to-Period

September 30,

The following table summarizes income from operations for our reportable segments for the three months ended March 31 (dollars in millions):

Period-to-Period

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WM Renewable Energy

WM Healthcare Solutions

Corporate and Other

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* Percentage change does not provide a meaningful comparison.

The significant items affecting income from operations for our segments during the three and nine months ended September 30, 2024, as compared with the prior year periods, are summarized below:

● Collection and Disposal — Income from operations in our Collection and Disposal businesses increased primarily due to (i) our focus on price increases that keep pace with inflationary cost pressures in our business alongside intentional efforts to improve efficiency and operating costs incurred to serve our customers;

(ii) gains on the sale of non-strategic assets and (iii) higher landfill volumes generated from special waste and municipal solid waste as well as an increase in volumes from our WMSBS business.

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

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

● Recycling Processing and Sales — The increase in income from operations in Recycling Processing and Sales for the nine-month period was primarily due to (i) improved commodity pricing compared to prior year;

(ii) a gain on sale of a non-strategic asset in the second quarter of 2024 and (iii) benefits from our growth investments and cost management.

These improvements were partially offset by the impact of higher facility shutdown costs incurred during our capital investment programs targeted at automating and upgrading our single stream recycling business across North America.

● WM Renewable Energy — The increase in income from operations in WM Renewable Energy was primarily driven by increased revenue due to (i) higher RIN quantities and market values and (ii) increased beneficial use of landfill gas due to the completion of additional projects.

● Corporate and Other — The decrease in income from operations was primarily driven by (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 recorded during the second quarter of 2024;

(ii) higher annual and long-term incentive compensation costs;

(iii) increased professional fees to support strategic initiatives, including our pending acquisition of Stericycle;

(iv) an increase in risk management costs due to an adjustment to our reserves for auto and workers compensation claims and increases in premiums for property coverage and (v) a loss arising from the divestiture of a minority-owned medical waste investment.

The significant items affecting income from operations for our segments during the first quarter of 2025, as compared with the prior year period, are summarized below:

Collection and Disposal — Income from operations in our Collection and Disposal businesses increased primarily due to (i) revenue growth from price increases, which translate into increased yield or average unit price;

(ii) special waste volume in our West Tier, which was favorably impacted by the wildfire clean-up activities and (iii) actions to improve the

efficiency and operating costs incurred to serve our customers.

These increases were partially offset by a decline in industrial collection volumes primarily due to lower contributions from temporary business.

Recycling Processing and Sales — Income from operations in Recycling Processing and Sales was essentially flat year over year.

While certain costs attributable to maintenance and repairs and lease termination increased, we benefitted from the automation of our recycling facilities as well as investments in new facilities and improvements in commodity pricing.

WM Renewable Energy — The decrease in income from operations in WM Renewable Energy was primarily due to the value and quantity of RINs sold partially offset by an increase in energy prices related to extreme winter weather.

WM Healthcare Solutions – Our WM Healthcare Solutions segment generated a loss of $25 million during the three months ended March 31, 2025, which was largely attributable to (i) depreciation and amortization expenses and (ii) integration related expenses.

There was no activity for this segment during the first quarter of 2024, as Stericycle was acquired in November 2024.

Corporate and Other — The decrease in income from operations was primarily driven by (i) integration related consulting fees in connection with our recent Stericycle acquisition and (ii) an increase in risk management expenses as referenced in Operating Expenses above.

Interest Expense, Net

Our interest expense, net was $131 million and $397 million for the three and nine months ended September 30, 2024, respectively, compared to $127 million and $372 million for the three and nine months ended September 30, 2023, respectively.

The increase is primarily related to an increase in our average debt balances to fund growth as well as an increase in our weighted average borrowing rate of approximately 20 basis points.

Equity in Net Income (Losses) of Unconsolidated Entities

We recognized equity method investment income of $1 million and $4 million during the three and nine months ended September 30, 2024, respectively, compared to losses of $18 million and $41 million for the three and nine months ended September 30, 2023, 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 Note 4 to the Condensed Consolidated Financial Statements for further discussion.

Our interest expense, net was $232 million and $130 million during the three months ended March 31, 2025 and 2024, respectively.

The increase is primarily related to an increase in our average debt balances to fund our November 2024 acquisition of Stericycle.

Income Tax Expense

Our income tax expense was $235 million and $611 million for the three and nine months ended September 30, 2024, respectively, compared to $210 million and $570 million for the three and nine months ended September 30, 2023, respectively.

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

Our income tax expense and effective income tax rates were $151 million, or 19.2%, and $162 million, or 18.6%, for the three months ended March 31, 2025 and 2024, respectively.

See Note 4 to the Condensed Consolidated Financial Statements for more information related to income taxes.

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

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

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

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

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

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

The Company projects a full year investment tax credit benefit of approximately $145 million, which is derived from the projected completion of five new RNG facilities by the end of 2024.

The amount of the projected investment tax credit benefit for 2024 is based on a number of estimates and assumptions, including the timing of project completion and interpretation of the IRA.

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

In coordination with other members of the RNG industry and external advisors we are engaging directly with the U.S.

Congress, the current federal administration, and other biogas sector stakeholders to encourage the Treasury Department to further refine its analysis prior to publication of final regulations that more accurately reflect the express language and

legislative intent of the statute with respect to the investment tax credit.

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

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

The provisions of the IRA concerning investment tax credits are expected to generate a cumulative benefit ranging from $300 million to $400 million, $145 million of which was recognized in 2023 and 2024 with the remainder anticipated to be realized in 2025 and 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.

Additionally, we expect that the production tax credit incentives for investments in renewable energy and carbon capture, as expanded by the IRA, could 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 .

Liquidity and Capital Resources

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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 additional ability to manage liquidity during periods of significant financial market disruption through temporary modification of our capital expenditure and share repurchase plans.

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 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 (in millions):

September 30,

Cash and cash equivalents

Restricted funds and other:

Restricted funds:

Insurance reserves

Final capping, closure, post-closure and environmental remediation funds

Total restricted funds and other (a)

Total restricted funds (a)

Current portion

Long-term portion

(a) As of September 30, 2024 and December 31, 2023, $90 million of these account balances were included in other current assets in our Condensed Consolidated Balance Sheets.

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

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

As of September 30, 2024, we have classified $1.2 billion of debt maturing in the next 12 months as long term because we have the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity under our $3.5 billion long-term U.S.

and Canadian revolving credit facility (“$3.5 billion revolving credit facility”).

(a) As of March 31, 2025 and December 31, 2024, $100 million of these account balances were included in other current assets in our Condensed Consolidated Balance Sheets.

Debt — As of March 31, 2025, we had approximately $3.8 billion of debt maturing within the next 12 months, including (i) $1.5 billion of short-term borrowings under our commercial paper program (net of related discount on issuance);

(ii) $1.3 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities;

(iii) $500 million of 0.75% senior notes that mature in November 2025 and (iv) $454 million of other debt with scheduled maturities within the next 12 months, including $298 million of tax exempt bonds.

As of March 31, 2025, we have classified $2.8 billion of debt maturing in the next 12 months as long-term because we have the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity under our $3.5 billion long-term U.S.

and Canadian revolving credit facility.

The remaining $954 million of debt maturing in the next 12 months is classified as current obligations.

During the nine months ended September 30, 2024, WMI issued $750 million of 4.950% senior notes due 2027 and $750 million of 4.950% senior notes due 2031, the net proceeds of which were $1.5 billion.

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

Guarantor Financial Information

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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):

September 30,

March 31, 2025

December 31, 2024

Balance Sheet Information:

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Other noncurrent liabilities

Nine Months Ended

September 30, 2024

Three Months Ended

March 31, 2025

Income Statement Information:

1 unchanged sentence

Summary of Cash Flow Activity

The following is a summary of our cash flows for the nine months ended September 30 (in millions):

The following is a summary of our cash flows for the three months ended March 31 (in millions):

Net cash provided by operating activities

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Net cash used in financing activities

Net Cash Provided by Operating Activities — Our operating cash flows increased by $542 million for the nine months ended September 30, 2024, as compared with the prior year period, driven by (i) higher earnings in our Collection and Disposal businesses;

(ii) favorable changes in working capital and (iii) lower annual incentive compensation payments.

This increase was partially offset by higher cash interest payments.

Net Cash Used in Investing Activities — The most significant items included in our investing cash flows for the nine months ended September 30, 2024 and 2023 are summarized below:

● Capital Expenditures — We used $2,116 million and $1,853 million for capital expenditures during the nine months ended September 30, 2024 and 2023, respectively.

The increase in capital spending is primarily driven by (i) our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments and (ii) an increase in truck spending in the current year due to supply chain constraints on truck deliveries in the prior year.

● Acquisitions — Our spending on acquisitions was $790 million and $139 million during the nine months ended September 30, 2024 and 2023, respectively, of which $782 million and $139 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.

Substantially all of these acquisitions are related to our solid waste and recycling businesses.

Net Cash Provided by Operating Activities — Our operating cash flows decreased by $159 million for the three months ended March 31, 2025, as compared with the prior year period, driven by (i) higher cash interest due to additional debt incurred to fund our acquisition of Stericycle;

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

This decrease was partially offset by higher earnings in all of our segments, including the contributions from our recent acquisitions.

Net Cash Used in Investing Activities — The most significant items included in our investing cash flows for the three months ended March 31, 2025 and 2024 are summarized below:

● Capital Expenditures — We used $831 million and $668 million for capital expenditures during the three months ended March 31, 2025 and 2024, respectively.

The increase in capital spending is primarily driven by (i) investments in capital assets such as trucks, landfills and equipment and (ii) capital expenditures within our WM Healthcare Solutions segment to support the business.

● Divestitures — Proceeds from divestitures of businesses and other assets, net of cash divested were $98 million and $15 million for the three months ended March 31, 2025 and 2024, respectively.

Proceeds in 2025 primarily related to the sale of our WM Healthcare Solutions’ Spain and Portugal subsidiaries.

The remaining 2025 and 2024 proceeds were from the sale of certain non-strategic assets.

● Other, Net — The year-over-year changes in other investing activities were primarily driven by changes in our investment portfolio associated with a wholly-owned insurance captive.

During the nine months ended September 30, 2024 and 2023, we used $38 million and $71 million, respectively, of cash from restricted cash and cash equivalents to invest in available-for-sale securities.

Net Cash Used in Financing Activities — The most significant items affecting the comparison of our financing cash flows for the nine months ended September 30, 2024 and 2023 are summarized below:

● Debt Borrowings and Repayments — The following summarizes our cash borrowings (net of related discount) and repayments of debt for the nine months ended September 30 (in millions):

During the three months ended March 31, 2025 and 2024, we used $92 million and $90 million, respectively, of cash from restricted cash and cash equivalents to invest in available-for-sale securities.

Net Cash Used in Financing Activities — The most significant items affecting the comparison of our financing cash flows for the three months ended March 31, 2025 and 2024 are summarized below:

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

Commercial paper

Tax-exempt bonds

Commercial paper

Tax-exempt bonds

Net cash borrowings (repayments)

Refer to Note 3 to the Condensed Consolidated Financial Statements for additional information related to our debt borrowings and repayments.

● Common Stock Repurchase Program — During the nine months ended September 30, 2024 and 2023, we used $262 and $990 million, respectively, to repurchase shares of our common stock under accelerated share repurchase agreements and open market transactions.

The decrease in share repurchase activity in 2024 relates to our temporary suspension of share repurchase activity in anticipation of the acquisition of Stericycle.

We expect to resume share repurchases once the Company’s leverage returns to targeted levels, which is currently projected to be about 24 months after the acquisition closes.

See Note 11 to the Condensed Consolidated Financial Statements for additional information about our share repurchase activity.

● Common Stock Repurchase Program — During the three months ended March 31, 2024, we used $250 million to repurchase shares of our common stock under accelerated share repurchase agreements .

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

We expect to resume share repurchases 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.

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

We paid cash dividends of $909 million and $855 million during the nine months ended September 30, 2024 and 2023, respectively.

The increase in dividend payments is due to our quarterly per share dividend increasing from $0.70 in 2023 to $0.75 in 2024.

We paid cash dividends of $336 million and $307 million during the three months ended March 31, 2025 and 2024, respectively.

The increase in dividend payments is primarily due to our quarterly per share dividend increasing from $0.75 in 2024 to $0.825 in 2025.

Free Cash Flow

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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 (in millions), and may not be calculated the same as similarly-titled measures presented by other companies:

Three Months Ended

Nine Months Ended

September 30,

Our calculation of free cash flow and reconciliation to net cash provided by operating activities for the three months ended March 31, 2025 and 2024 is shown in the table below (in millions) and may not be calculated the same as similarly-titled measures presented by other companies:

Net cash provided by operating activities

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Free cash flow

(a) These growth investments are intended to further our sustainability leadership position by increasing recycling volumes and growing renewable natural gas generation.

These growth investments are intended to further our sustainability leadership position by increasing recycling volumes and growing renewable natural gas generation.

We expect they will deliver circular solutions for our customers and drive environmental value to the communities we serve.

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Seasonal Trends

O ur financial and operating results may fluctuate for many reasons, including period-to-period changes in the relative contribution of revenue by each line of business, changes in commodity prices and general economic conditions.

Our financial and operating results may fluctuate for many reasons, including period-to-period changes in the relative contribution of revenue by each line of business, changes in commodity prices and general economic conditions.

Our operating revenues and volumes typically experience seasonal increases in the summer months that are reflected in second and third quarter revenues and results of operations.

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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.

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.

Quantitative and Qualitative Disclosures About Market Risk.

Information about market risks as of September 30, 2024 does not materially differ from that discussed under Item 7A in our Annual Report on Form 10-K for the year ended December 31, 2023.

Information about market risks as of March 31, 2025 does not materially differ from that discussed under Item 7A in our Annual Report on Form 10-K for the year ended December 31, 2024.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis