WASTE MANAGEMENT INC

Waste Management, Inc. is North America's leading provider of comprehensive environmental solutions, providing services throughout the United States and Canada. The company partners with customers and communities to manage and reduce waste at each stage from collection to disposal, while recovering valuable resources and creating clean, renewable energy. The solid waste business is operated and managed locally by subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, recycling and resource recovery services. The company owns or operates 257 ¹ landfill sites, which is the largest network of landfills throughout the U.S. and Canada, and manages 342 ² transfer stations, excluding those acquired from Stericycle, that consolidate, compact and transport waste efficiently and economically. The fundamental strategy has not changed; the company remains dedicated to providing long-term value to stockholders by successfully executing a core strategy of focused differentiation and continuous improvement, enabled by a people-first, technology-led focus to drive the mission to maximize resource value while minimizing environmental impact.

The company encounters intense competition from governmental, quasi-governmental and private sources in all aspects of its operations. It principally competes with large national waste management companies, counties and municipalities that maintain their own waste collection and disposal operations and regional and local companies of varying sizes and financial resources. The industry also includes companies that specialize in certain discrete areas of waste management, operators of alternative disposal facilities, companies that seek to use parts of the waste stream as feedstock for renewable energy and other by-products and waste brokers that rely upon haulers in local markets to address customer needs. The company faces intense competition based on pricing and quality of service, and also competes for business based on breadth of service offerings. During 2025, the largest customer represented less than 5% ³ of annual revenues.

The company generates revenue through a mix of collection, transfer, disposal, recycling, renewable energy, and healthcare solutions services. Collection services are provided under two types of arrangements: for commercial and industrial collection services, typically three-year ⁴ service agreements, and for most residential collection services, a contract with or franchise granted by a municipality, homeowners' association or some other regional authority that gives the exclusive right to service all or a portion of the homes in an area, typically for periods of three to ten ⁵ years. The fees for residential collection are either paid by the municipality or authority from their tax revenues or service charges, or are paid directly by the residents receiving the service. The company is generally phasing out traditional manual systems and moving to further automate residential collection services. The company's Recycling Processing and Sales segment has been transitioning the customer base over time from the traditional rebate model to a fee-for-service model that ensures the cost of processing the recyclable materials is covered along with an acceptable margin.

The Collection and Disposal businesses provide integrated environmental services including collection, transfer and disposal, evaluated through two geographic segments: East Tier and West Tier. The East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. The West Tier primarily includes geographic areas located in the Western, Southern and Central U.S., including the upper Midwest region, and British Columbia, Canada. As of December 31, 2025, the company owned or operated 253 ⁶ solid waste landfills and four ⁷ hazardous waste landfills. The company also owned or controlled the management of 244 ⁸ sites with remedial activities that are in closure or have received a certification of closure. Included within the Collection and Disposal businesses are landfills having 19 ⁹ third-party power generating facilities, 17 ¹⁰ third-party RNG facilities, and nine ¹¹ third-party projects delivering landfill gas by pipeline to industrial customers. The company receives royalties from each facility, including the benefit of a 15% ¹² royalty from the Renewable Energy segment based on net operating revenue generated through the sale of RNG, RINs, electricity and capacity, RECs and related environmental attributes from the 86 ¹³ landfill beneficial use renewable energy projects owned by Renewable Energy on active landfills, which is eliminated in consolidation.

The Recycling Processing and Sales segment includes the processing and sales of materials collected from residential, commercial and industrial customers. As of December 31, 2025, the company operated 113 ¹⁴ recycling facilities, of which 51 ¹⁵ are single stream, where cardboard, paper, glass, metals, plastics, construction and demolition materials and other recycling commodities are recovered for resale. The company also operated 49 ¹⁶ organics recycling facilities. The Renewable Energy segment develops, operates and promotes projects for the beneficial use of landfill gas. As of December 31, 2025, the company had 103 ¹⁷ landfill gas beneficial use projects producing commercial quantities of methane gas at owned or operated landfills, including 62 ¹⁸ projects where processed gas fuels electricity generators, 24 ¹⁹ projects where gas is delivered by pipeline to industrial customers, and 17 ²⁰ projects where landfill gas is processed to pipeline quality RNG. The Healthcare Solutions segment, through subsidiary Stericycle, provides regulated waste and compliance services and secure information destruction services. As of December 31, 2025, the company operated 42 ²¹ autoclave facilities in the U.S. and Canada, 9 ²² alternative medical waste treatment facilities in the U.S., Ireland and the U.K., 17 ²³ medical waste incinerator facilities in the U.S., Canada and the U.K., and 99 ²⁴ secure information destruction facilities in the U.S., Canada and Western Europe.

On November 4, 2024, the company completed the acquisition of all outstanding shares of Stericycle for $62.00 ²⁵ per share in cash, with a total enterprise value of $7.2 billion ²⁶ (net of cash acquired) when including the assumption of $0.5 billion ²⁷ of debt and the repayment of approximately $0.8 billion ²⁸ of net debt. For the year ended December 31, 2025, the company incurred acquisition and integration related costs of $120 million ²⁹, comprised of $89 million ³⁰ of selling, general and administrative costs and $31 million ³¹ of restructuring costs. In December 2025, the company announced that the Board of Directors expects to increase the quarterly dividend from $0.825 ³² to $0.945 ³³ per share for dividends declared in 2026, which is a 14.5% ³⁴ increase from the quarterly dividends declared in 2025, marking the 23rd consecutive ³⁵ year of dividend increases. The Board of Directors approved up to $3.0 billion ³⁶ in future share repurchases, exclusive of fees, commissions and taxes, and the company currently expects to repurchase approximately $2.0 billion ³⁷ of shares during 2026. There were no common stock repurchases during 2025 ³⁸.

Revenues were $25,204 million ³⁹ for 2025 compared with $22,063 million ⁴⁰ in 2024, an increase of $3,141 million ⁴¹, or 14.2% ⁴². Operating expenses were $15,012 million ⁴³ in 2025, or 59.6% ⁴⁴ of revenues, compared with $13,383 million ⁴⁵, or 60.7% ⁴⁶ of revenues, in 2024. Income from operations was $4,308 million ⁴⁷, or 17.1% ⁴⁸ of revenues, in 2025 compared with $4,063 million ⁴⁹, or 18.4% ⁵⁰ of revenues, in 2024. Net income attributable to Waste Management, Inc. was $2,708 million ⁵¹, or $6.70 ⁵² per diluted share, compared with $2,746 million ⁵³, or $6.81 ⁵⁴ per diluted share, in 2024. Net cash provided by operating activities was $6,043 million ⁵⁵ in 2025, compared with $5,390 million ⁵⁶ in 2024. Free cash flow was $2,937 million ⁵⁷ in 2025, compared with $2,317 million ⁵⁸ in 2024.

The company's sustainability growth strategy includes significant investments in the Renewable Energy and Recycling Processing and Sales segments, while increasing automation and reducing labor dependency. The company continues to evaluate and plan to pursue emerging diversion technologies that may generate additional value. The company is investing in enhanced recycling facility technology at new and existing facilities to benefit labor productivity, support increased recycling capacity and allow for dynamic adjustments to respond to evolving end-market demands. In 2025 and 2024, the company opened eight ⁵⁹ and three ⁶⁰ new recycling facilities, respectively, within the U.S. and Canada equipped with advanced recycling technology. The company continues to invest in recycling facility automation and new markets across the U.S. and Canada. The company expects new RNG facilities to qualify for federal tax credits and to realize those credits through 2027 ⁶¹ under Section 48 of the Internal Revenue Code, and completed construction of seven ⁶² RNG facilities in 2025 and five ⁶³ RNG facilities in 2024.

The acquisition of Stericycle provides a complementary business platform in medical waste, a sector with attractive near- and long-term growth dynamics, and in secure information destruction services to further the company's leading suite of comprehensive waste and environmental solutions. The company achieved synergies by reducing costs of duplicative business processes, established a performance management approach aimed at accountability and continued to improve customer engagement, billing and collection processes to deliver cash flow. The company is pursuing long-term RNG sales transactions in the voluntary market to mitigate against risk and stabilize the RNG portfolio. The company is also working closely with stakeholders to encourage the voluntary market for RNG demand, including utility RNG procurement programs, and sustainability protocols, as companies and other customers increasingly look to reduce their GHG emissions profiles.

The company significantly reduced operating expenses as a percentage of revenue when compared to prior year through efficiency gains, improved employee turnover, momentum in truck deliveries, the benefit of customer price increases and higher margin special waste volumes. The company continues to focus on yield growth in the landfill business, with municipal solid waste achieving yield of 6.5% ⁶⁴ in 2025. The company continues to take proactive steps to adjust business models to protect against the down-side risk of changes in commodity prices. The company takes proactive steps to recover and mitigate inflationary cost pressures through overall pricing efforts and by managing costs through efficiency, labor productivity and investments in technology to automate certain aspects of the business.

The company continues to make progress on investments to expand the Recycling Processing and Sales and Renewable Energy segments. The company is continuing a multi-year commitment to strategic investments in technology that automate and innovate operations, improve the customer experience, provide alternatives to traditional disposal and maximize the resource value of waste. The company operates a large fleet of natural gas vehicles and plans to continue to invest in these assets for the collection fleet. The company is proactively engaging in pilots of electric powered heavy-duty vehicles and anticipates that it could redirect future planned capital investments in the fleet toward these assets when the vehicles prove economically and operationally viable. As of December 31, 2025, the company had approximately 60,500 ⁶⁵ full-time employees across the U.S., Canada, Western Europe, and India.

The company used $3,227 million ⁶⁶ and $3,231 million ⁶⁷ for capital expenditures in 2025 and 2024, respectively. The decrease in capital spending in 2025 compared to 2024 is primarily due to planned reductions in capital investment in sustainability growth projects as the company moves from peak construction of this portfolio into a period where it will harvest strong returns on these businesses. The company expects the cumulative benefit from the investment tax credit to be between $400 million and $425 million ⁶⁸, the remainder of which it expects to recognize through 2027 ⁶⁹. The company announced in December 2025 that the Board of Directors expects to increase the quarterly dividend from $0.825 ⁷⁰ to $0.945 ⁷¹ per share for dividends declared in 2026. The Board of Directors approved up to $3.0 billion ⁷² in future share repurchases, exclusive of fees, commissions and taxes, and the company currently expects to repurchase approximately $2.0 billion ⁷³ of shares during 2026.

The company faces headwinds from commodity price volatility, with average market prices for single-stream recycled commodities declining approximately 20% ⁷⁴ in 2025 as compared to the prior year. The decline in market prices in 2025 for recyclable commodities resulted in a year-over-year decrease in revenue of $166 million ⁷⁵. The company also faces uncertainty regarding changes to federal and state renewable fuel policies, as the current U.S. presidential administration has retroactively lowered the 2024 blending volumes, proposed to revisit and lower the 2025 standards, proposed low volumes for compliance years 2026 and 2027 ⁷⁶ and departed from the previous administration in granting small refinery exemptions from RFS program requirements. The company faces headwinds from inflation, which has increased costs for the goods and services purchased, particularly for labor, repair and maintenance, and subcontractor costs. Significant restrictions and tariffs on foreign trade have a negative impact on the recycling export business and cross-border commerce, particularly with Canada, and increase the cost of certain equipment and other materials used in operations.

The company faces constraints from the regulatory environment, including extensive and evolving laws and regulations pertaining to environmental protection, health, safety, land use, zoning, transportation, ethical business conduct, data privacy and security. The company faces risks related to PFAS regulation, as in April 2024, the EPA finalized the designation of two PFAS compounds as hazardous substances under CERCLA. The company may face increased exposure to testing, remediation and litigation costs as a result of new and emerging PFAS regulations and requirements. The company also faces constraints from the seasonal nature of the business, with operating revenues and volumes typically experiencing seasonal increases in the summer months that are reflected in second and third quarter revenues and results of operations.

The company faces significant risks from commodity price volatility, as the decline in market prices in 2025 for recyclable commodities resulted in a year-over-year decrease in revenue of $166 million ⁷⁷, and average market prices for single-stream recycled commodities declined approximately 20% ⁷⁸ in 2025. Changes to federal and state renewable fuel policies could affect the financial performance of the Renewable Energy segment, as the current administration has proposed low volumes for compliance years 2026 and 2027 ⁷⁹ and the RINs market has historically been volatile. The company faces risks related to the Stericycle acquisition, including potential failure to realize anticipated cost synergies and the impact of $120 million ⁸⁰ in acquisition and integration related costs incurred in 2025. The company faces risks from PFAS regulation, as the EPA finalized the designation of two PFAS compounds as hazardous substances under CERCLA in April 2024, which may increase exposure to testing, remediation and litigation costs. The company faces risks from its significant debt load of $22,907 million ⁸¹ as of December 31, 2025, with $2.9 billion ⁸² of debt exposed to changes in market interest rates within the next 12 months, and a 100-basis point increase in interest rates would increase interest expense by $35 million ⁸³.

Management's message emphasizes the company's commitment to its core strategy of focused differentiation and continuous improvement, enabled by a people-first, technology-led focus. Key themes include investing in the company's people through competitive wages, digital platform investments and training; investing in recycling automation to reduce costs and increase throughput; integrating the Stericycle business and achieving synergies; and returning value to stockholders through dividend payments and share repurchases. Management highlighted that in December 2025, the Board of Directors expects to increase the quarterly dividend from $0.825 ⁸⁴ to $0.945 ⁸⁵ per share for dividends declared in 2026, which is a 14.5% ⁸⁶ increase and marks the 23rd consecutive ⁸⁷ year of dividend increases. Management also noted that given the substantial progress already made on leverage reduction following the Stericycle acquisition, the company resumed share repurchases in February 2026, with the Board of Directors approving up to $3.0 billion ⁸⁸ in future share repurchases, and the company currently expects to repurchase approximately $2.0 billion ⁸⁹ of shares during 2026.