What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-29 compared with 2025-04-29 · 170 added, 119 removed, 277 unchanged (51% of the section changed)

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We are North America’s leading provider of comprehensive environmental solutions, 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 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

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.

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.

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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.

During the first half of 2025, we continued to prioritize service delivery for our customers and the integration of operations into WM’s organizational structure, ensuring business alignment with WM’s core values and capturing synergies through reduction of duplicative processes and costs.

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

Our fundamental strategy has not changed;

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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.

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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.

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.

During the first half of 2025, we experienced decreases in market prices for recycled commodities when compared to the prior year period, particularly in our recycling brokerage business.

While the combined impacts of commodity price fluctuations from the prior year had a modestly favorable impact on the WM Renewable Energy segment in the first half of 2025, we may experience more significant impacts from fluctuations in the prices of renewable identification numbers (“RINs”) and natural gas as we continue to make investments to grow that segment in the future.

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 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.

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Current Quarter Financial Results

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.

During the second 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.

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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;

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

● Revenues of $6,430 million, compared with $5,402 million in the prior year period, an increase of $1,028 million, or 19.0%.

The increase is primarily attributable to (i) our recent acquisitions, particularly Stericycle;

(ii) higher yield in our Collection and Disposal businesses and (iii) higher volumes primarily in our landfill, recycling and WM Renewable Energy businesses.

These increases were partially offset by (i) lower residential and temporary industrial collection volumes and (ii) a reduction in single-stream and brokerage recycled commodity prices;

● Operating expenses of $3,839 million, or 59.7% of revenues, compared with $3,291 million, or 60.9% of revenues, in the prior year period.

The $548 million increase in operating expenses is primarily attributable to (i) our recent acquisitions;

(ii) increased post-collection volumes and (iii) moderate inflationary pressures.

These increases were partially offset by (i) lower residential and temporary industrial business volumes and (ii) operating efficiency and cost control initiatives which positioned us to reduce our operating expenses as a percentage of revenue when compared with the prior year period;

● Selling, general and administrative expenses were $696 million, or 10.8% of revenues, compared with $501 million, or 9.3% of revenues, in the prior year period.

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;

The $195 million increase is primarily attributable to (i) higher labor costs from acquisitions and (ii) consulting costs incurred to support the integration of Stericycle;

● Income from operations was $1,151 million, or 17.9% of revenues, compared with $1,009 million, or 18.7% of revenues, in the prior year period.

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;

The $142 million increase in the current year earnings was primarily driven by (i) growth in our Collection and Disposal business;

(ii) a $54 million charge recognized in the prior year to increase the estimated fair value of a liability associated with the expected disposition of an investment we hold in a waste diversion technology business and (iii) higher volumes in our WM Renewable Energy business due to the completion of projects that increase the beneficial use of landfill gas sold to third parties.

This growth was partially offset by (i) higher depreciation and amortization costs and integration related expenses arising from our Stericycle acquisition and (ii) lower recycled commodity prices;

● Net income attributable to Waste Management, Inc.

was $726 million, or $1.80 per diluted share, compared with $680 million, or $1.69 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.

The $46 million increase was primarily driven by an increase in income from operations, discussed above, and to a lesser extent a reduction in income tax expense.

These increases were partially offset by increased interest expense related to the additional debt incurred to finance our Stericycle acquisition;

● Net cash provided by operating activities was $1,545 million compared with $1,154 million in the prior year period, with the increase driven by (i) higher earnings in the majority of our segments, including the contributions from our recent acquisitions and (ii) favorable changes in working capital, net of effects of acquisitions and

divestitures.

This increase was partially offset by higher cash interest primarily due to additional debt incurred to fund our acquisition of Stericycle.

● Free cash flow was $818 million compared with $530 million in the prior year period.

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.

The increase in free cash flow is attributable to the increase in net cash provided by operating activities discussed above.

These increases were partially offset by (i) increased capital spending, which was driven by investments in capital assets such as trucks, landfills and equipment and capital expenditures within our WM Healthcare Solutions segment to support the business and (ii) lower proceeds from divestitures 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 for the three months ended March 31 are as follows (in millions):

The mix of operating revenues from our major lines of business for the three and six months ended June 30 are as follows (in millions):

Revenues (a)(b)

Three Months Ended June 30:

Other collection

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Corporate and Other

Revenues (a)(b)

Six Months Ended June 30:

Other collection

Total collection

Total Collection and Disposal

Recycling Processing and Sales

WM Renewable Energy

WM Healthcare Solutions

Corporate and Other

Other collection

Total collection

Total Collection and Disposal

Recycling Processing and Sales

WM Renewable Energy

Corporate and Other

(a) Intercompany operating revenues reflect each segment’s total intercompany sales, including intercompany sales within a segment and between segments.

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Three Months Ended

March 31, 2025 vs.

June 30, 2025 vs.

Period-to-Period Change for the

Six Months Ended

June 30, 2025 vs.

Collection and Disposal

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Foreign currency translation

(a) Calculated by dividing the increase or decrease for the current year period by the prior year period’s related business revenue adjusted to exclude the impacts of divestitures for the current year period.

(b) Calculated by dividing the increase or decrease for the current year period by the prior year period’s total Company revenue adjusted to exclude the impacts of divestitures for the current year period.

(a) Calculated by dividing the increase or decrease for the current year period by the prior year period’s related business revenues adjusted to exclude the impacts of divestitures for the current year period.

(b) Calculated by dividing the increase or decrease for the current year period by the prior year period’s total Company revenues adjusted to exclude the impacts of divestitures for the current year period.

(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.

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Period-to-Period Change for the

Three Months Ended

March 31, 2025 vs.

Six Months Ended

June 30, 2025 vs.

Total collection

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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.

We continue to see yield growth in our landfill business primarily driven by municipal solid waste landfills, which achieved average yield of 7.0% and 5.6% for the three and six months ended June 30, 2025, respectively, led by strong performance in our West Tier.

Recycling Processing and Sales and WM Renewable Energy — Recycling Processing and Sales revenues attributable to yield decreased $33 million and $41 million for the three and six months ended June 30, 2025, respectively, as compared with the prior year periods.

Average market prices for single-stream recycled commodities declined nearly 15% and 5% for the three and six months ended June 30, 2025, respectively, as compared with the prior year periods.

Revenues attributable to yield in our WM Renewable Energy segment increased $8 million and $16 million for the three and six months ended June 30, 2025, respectively, as compared with the prior year periods, primarily driven by an increase in natural gas and electricity 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.

Energy Surcharge and Mandated Fees — These fees increased $9 million and $7 million for the three and six months ended June 30, 2025, respectively, as compared with the prior year periods.

The increase was primarily due to higher mandated fees of $18 million and $25 million for the three and six months ended June 30, 2025, respectively, as compared with 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, particularly in our West Tier.

Partially offsetting the increase was a decline in our energy surcharge revenues of $9 million and $18 million for the three and six months ended June 30, 2025, respectively, as compared with the prior year periods, primarily due to a decline in the market prices for diesel fuel of approximately 8% for the three and six months ended June 30, 2025.

Our revenues from volume (excluding volumes from acquisitions and divestitures) increased $115 million and $119 million for the three and six months ended June 30, 2025, respectively, as compared with the prior year periods.

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

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

Furthermore, volumes increased in our Strategic Business Solutions business due to our focus on a differentiated service model for national account customers.

These volume increases were partially offset by declines in industrial and residential collection volume primarily due to lower contributions from temporary industrial business and intentional shedding of lower-margin residential 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.

Acquisitions and divestitures resulted in a net increase in revenues of $740 million, or 13.6%, and $1,430 million, or 13.5%, respectively, for the three and six months ended June 30, 2025, as compared with the prior year periods.

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

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Operating Expenses

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):

The following table summarizes the major components of our operating expenses for the three and six months ended June 30 (in millions of dollars and as a percentage of revenues):

Three Months Ended

Six Months Ended

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.

Our operating expenses for the three and six months ended June 30, 2025 increased as compared with the three and six months ended June 30, 2024, primarily due to (i) our recent acquisitions;

(ii) increased post-collection volumes and (iii) moderate inflationary pressures.

These increases were offset, in part, by (i) lower residential and temporary industrial business volumes and (ii) continued operating efficiency and cost control initiatives in our Collection and Disposal businesses.

Despite the overall increase in operating expenses, efficiency gains, improved turnover and momentum in truck deliveries, combined with the benefit of price increases and high margin special waste volumes, 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 — 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.

The increase was offset, in part, by (i) residential collection efficiency improvements;

(ii) lower residential volumes attributable to intentional shedding of lower margin contracts and (iii) improved driver retention.

Transfer and Disposal Costs — The increase in transfer and disposal costs was primarily due 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.

This increase was partially offset by lower residential volumes attributable to intentional shedding of lower margin contracts.

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.

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

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.

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 and six months ended June 30, 2024.

Cost of Goods Sold — The decrease in cost of goods sold was primarily driven by a 15% and 5% decrease in average market prices for single-stream recycled commodities for the three and six months ended June 30, 2025, respectively, as compared with the prior year periods.

This decrease was partially offset by additional pipeline transportation costs attributable to new RNG facilities brought on-line since the prior year periods.

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.

These increases were offset, in part, by a decline in the market prices for diesel fuel of approximately 8% 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 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.

Landfill Operating Costs — The increase in landfill operating costs for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, was primarily due to an increase in volumes and higher leachate treatment costs in our West Tier.

Partially offsetting the increase for the six months ended June 30, 2025 were certain adjustments to increase our environmental remediation reserve during the first quarter of 2024.

Risk Management — Risk management costs decreased for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to improved claims experience offset, in part, by (i) additional claims and premiums attributable to our recent acquisitions and (ii) prior year quarter insurance recoveries for property claims associated with a hurricane in 2023.

The increase for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was due to (i) additional claims and premiums attributable to our recent acquisitions and (ii) increases in claims costs due to negative claim development on a limited population of severe cases during the first quarter of 2025.

Other — Other operating cost increases were primarily due to (i) additional expenses attributable to our recent acquisitions;

(ii) gains on the sale of real estate in 2024 and, to a much lesser extent, (iii) increased utility costs largely attributable to new RNG plants brought on-line since the prior year periods and increased power prices.

Selling, General and Administrative Expenses

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):

The following table summarizes the major components of our selling, general and administrative expenses for the three and six months ended June 30 (in millions of dollars and as a percentage of revenues):

Three Months Ended

Six Months Ended

Labor and related benefits

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Provision for bad debts

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.

Selling, general and administrative expenses increased for the three and six months ended June 30, 2025 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.

(ii) higher long-term incentive compensation costs and (iii) 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.

Provision for Bad Debts — The increase in provision for bad debts was primarily attributable to our WM Healthcare Solutions segment.

Other — The increase in other expenses was primarily related to increased spend across multiple cost categories, including technology, risk management and travel, largely driven by the acquisition of Stericycle.

Depreciation, Depletion and Amortization Expenses

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):

The following table summarizes the components of our depreciation, depletion and amortization expenses for the three and six months ended June 30 (in millions of dollars and as a percentage of revenues):

Three Months Ended

Six Months Ended

Depreciation of tangible property and equipment

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Amortization of intangible assets

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.

The increase in depreciation of tangible property and equipment for the three and six months ended June 30, 2025, as compared to the prior year periods, 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 for the three and six months ended June 30, 2025, as compared to the prior year periods, was primarily driven by volume increases, particularly at sites within our West Tier.

The increase in amortization of intangible assets for the three and sixth months ended June 30, 2025 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.

The increase in restructuring charges during the three and six months ended June 30, 2025 was primarily driven by employee costs related to our acquisition of Stericycle.

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

(Gain) loss from divestitures, asset impairments and unusual items, net for the three and six months ended June 30, 2025, primarily relates to a $16 million goodwill impairment charge to a business engaged in oil recovery and sludge processing services.

This charge is reflected in Other Ancillary within our Collection and Disposal businesses.

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

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

Income from Operations

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

The following table summarizes income from operations for our reportable segments for the three and six months ended June 30 (dollars in millions):

Three Months Ended

Six Months Ended

Period-to-Period

Collection and Disposal:

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*Percentage change does not provide a meaningful comparison.

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:

The significant items affecting income from operations for our segments during the three and six months ended June 30, 2025, 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) 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.

(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 higher depreciation and depletion costs as discussed in Depreciation, Depletion and Amortization Expenses above.

● Recycling Processing and Sales — The decline in income from operations in Recycling Processing and Sales was primarily due to (i) a gain on sale of a non-strategic asset in 2024;

(ii) declining commodity prices compared to the prior year periods and (iii) lease termination costs.

These decreases were partially offset by increased volumes, which can be attributed to the improved throughput of our facilities and the addition of new market facilities, and improved operating costs from the automation of our recycling facilities.

● WM Renewable Energy — The increase in income from operations in WM Renewable Energy was primarily due to higher volumes resulting from the completion of projects that increase the beneficial use of landfill gas sold to third parties.

● WM Healthcare Solutions — The loss generated during the three months and six months ended June 30, 2025, respectively, was largely attributable to (i) depreciation and amortization expenses and (ii) integration related expenses.

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

● Corporate and Other — The increase in income from operations was primarily driven by (i) a $54 million charge in the prior year to increase the estimated fair value of a liability associated with the expected disposition of an investment we hold in a waste diversion technology business and (ii) an improvement in risk management expenses.

These increases were partially offset by (i) integration-related consulting fees in connection with our Stericycle acquisition;

(ii) higher labor costs resulting from long-term incentive compensation costs and annual employee wage increases and (iii) professional services supporting business optimization.

Interest Expense , Net

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

Our interest expense, net was $232 million and $464 million for the three and six months ended June 30, 2025, respectively, compared to $136 million and $266 million for the three and six months ended June 30, 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 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.

Our income tax expense and effective income tax rate was $201 million, or 21.7%, and $352 million, or 20.5%, for the three and six months ended June 30, 2025, respectively, compared to $214 million, or 23.9%, and $376 million, or 21.3%, for the three and six months ended June 30, 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”) contains several tax-related provisions, including with respect to (i) alternative fuel tax credits;

Tax Legislation — On July 4, 2025, President Trump signed the One Big Beautiful Bill Act into law.

We are currently evaluating several business tax provisions in the legislation, none of which are expected to have a material impact on our effective tax rate.

However, the permanent reinstatement of 100% bonus depreciation is expected to reduce our cash taxes by approximately $125 million in 2025.

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 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 provisions of the IRA concerning investment tax credits are expected to generate a cumulative benefit of approximately $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.

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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.

maturities, as necessary to meet its ongoing capital, operating, strategic and other liquidity requirements.

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.

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Cash and cash equivalents

Restricted funds:

Restricted funds and other:

Insurance reserves

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

Total restricted funds (a)

Total restricted funds and other (a)

Current portion

Long-term portion

(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);

(a) As of June 30, 2025 and December 31, 2024, $104 million and $100 million, respectively, of these account balances were included in other current assets in our Condensed Consolidated Balance Sheets.

Debt — As of June 30, 2025, we had approximately $4.0 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) $1.5 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) $464 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.

As of June 30, 2025, we have classified $3.0 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.

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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):

March 31, 2025

December 31, 2024

Balance Sheet Information:

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Other noncurrent liabilities

Three Months Ended

March 31, 2025

Six Months Ended

June 30, 2025

Income Statement Information:

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Summary of Cash Flow Activity

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

The following is a summary of our cash flows for the six months ended June 30 (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 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.

Net Cash Provided by Operating Activities — Our operating cash flows increased by $232 million for the six months ended June 30, 2025, as compared with the prior year period, driven by higher earnings in the majority of our segments, including the contributions from our recent acquisitions.

These increases were partially offset 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, primarily driven by timing of cash collections and (iii) higher annual incentive compensation payments.

Net Cash Used in Investing Activities — The most significant items included in our investing cash flows for the six months ended June 30, 2025 and 2024 are summarized below:

● Capital Expenditures — We used $1,563 million and $1,335 million for capital expenditures during the six months ended June 30, 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.

● Acquisitions — Our spending on acquisitions was $374 million and $250 million during the six months ended June 30, 2025 and 2024, respectively, of which $366 million and $243 million, respectively, are considered cash used in investing activities.

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

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

● Divestitures — Proceeds from divestitures of businesses and other assets, net of cash divested were $103 million and $58 million for the six months ended June 30, 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 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):

● Other, Net — The year-over-year changes in other investing activities were primarily driven by our 2024 repurchase of $778 million in certain WM tax-exempt bonds.

The remaining year-over-year changes in other investing activities are primarily driven by changes in our investment portfolio associated with a wholly-owned insurance captive.

During the six months ended June 30, 2025 and 2024, we used $87 million and $61 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 six months ended June 30, 2025 and 2024 are summarized below:

● Debt Borrowings and Repayments — The following summarizes our cash borrowings and repayments of debt for the six months ended June 30 (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 three months ended March 31, 2024, we used $250 million to repurchase shares of our common stock under accelerated share repurchase agreements .

● Common Stock Repurchase Program — During the six months ended June 30, 2024, we used $262 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.

We expect to resume share repurchases once the Company’s leverage returns to targeted levels, which is currently projected to be the second quarter of 2026.

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

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

We paid cash dividends of $669 million and $608 million during the six months ended June 30, 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.

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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 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:

Our calculation of free cash flow and reconciliation to net cash provided by operating activities for the three and six months ended June 30, 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:

Three Months Ended

Six Months Ended

Net cash provided by operating activities

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Free cash flow

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

(a) 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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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 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.

Information about market risks as of June 30, 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