WM Waste Management, Inc 10-Q 2026-09-30 section summaries

Waste Management, Inc. — Q3 and nine months ended September 30, 2026

Consolidated results

Revenue grew 6.3% in Q3 and 4.6% for 9M. Lower divestiture, impairment and unusual-item losses were an important contributor to operating-income growth. The prior-year Q3 included a $152M recycling impairment, a $45M East Tier landfill impairment and an $11M Renewable Energy early-termination payment. Q3 2026 included an $18M impairment related to accelerating an East Tier landfill closure; 9M 2026 also included a $34M West Tier divestiture gain.

Q3 segment results

The prior-year Recycling loss reflected the $152M impairment associated with suspending plastic film and wrap recycling amid weak post-consumer plastics pricing and demand.

WM says seasonal waste volumes generally rise in summer, supporting Q2 and Q3 activity; business-line mix, commodity prices and economic conditions also affect results. Severe weather can disrupt operations and customer activity, though events such as wildfires and hurricanes may increase waste volumes in affected areas.

Cash flow and capital allocation

Q3 capital expenditures were $660M, versus $847M in Q3 2025. Under its $3.0B repurchase authorization, WM repurchased 5.5M shares for $1.2B in 9M, including commissions and taxes; 1.0M shares for $222M were repurchased in Q3. The remaining authorization was $1.4B at quarter-end. WM declared dividends of $2.835 per share for 9M, compared with $2.475 in 2025.

Balance sheet, debt and shares

Equity less goodwill and other intangible assets implies negative tangible equity of $7.678B. Debt carrying value was $23.4B and estimated fair value was $21.7B, a $1.7B discount; at year-end, carrying value was $22.9B versus $22.5B fair value. These fair-value estimates use Level 2 inputs and may not represent realizable exchange values.

Shares outstanding declined from approximately 402.941M at December 31, 2025 to 397.717M at September 30, 2026; approximately 399.967M were outstanding at the start of Q3. Weighted-average diluted shares were 399.8M in Q3 and 402.2M in 9M, versus 404.3M and 404.0M in the 2025 periods. Potentially issuable shares were 3.8M, of which 1.2M were anti-dilutive in 2026.

At September 30, WM had approximately $4.4B of debt maturing within 12 months, including $2.2B of tax-exempt bonds with term-rate periods expiring within that timeframe and $1.2B of commercial paper. It classified $2.9B as long-term based on its intent and ability to refinance; $1.5B remained current. Its $3.5B revolving facility, maturing May 2029, had no direct borrowings and $2.0B of availability after supporting $229M of letters of credit. WM also had $944M of other uncommitted letter-of-credit lines utilized. A C$700M issue of 3.944% notes due 2033 helped fund redemption of C$500M of 2.60% notes.

Obligations, tax items and risks

Landfill and remediation liabilities totaled $3.586B at quarter-end, comprising $3.366B of landfill liabilities and $220M of remediation liabilities. WM identified itself at 75 EPA Superfund sites, including 14 it owns; its estimated liability for the San Jacinto River Waste Pits was approximately $100M. The high end of estimable remediation costs would add about $18M to the recorded remediation liability. Environmental estimates may change with regulatory or technological developments, new findings, or other parties’ ability to contribute.

Effective tax rates were 21.5% for Q3 and 21.3% for 9M, compared with 22.2% and 21.0%. RNG investment tax credits reduced tax expense by $31M in Q3 and $84M in 9M; RNG clean-fuel production credits reduced it by $16M and $60M, respectively. WM expects U.S. RNG investment and clean-fuel production credits through 2027 and 2029, respectively.

WM retains significant health, general-liability, auto and workers’ compensation risks; losses could exceed estimates or insurance limits. About 15% of employees are covered by collective bargaining agreements, and multiemployer-plan withdrawal assessments could affect a particular period’s earnings or cash flow. Management said it did not expect known contingencies or remaining guarantees to materially affect results, while noting outcomes and self-insured claims remain uncertain.

WM — Third quarter and nine months ended September 30, 2026

WM’s strategy remains focused on growing core collection and disposal, improving returns from recycling and renewable energy, and using automation and technology to increase efficiency. Following its Stericycle acquisition, Healthcare Solutions is shifting from integration toward scalable growth. In Q3, WM returned $957 million to shareholders through dividends and common-stock repurchases.

Consolidated results

Amounts in millions, except per-share data and margins.

Revenue grew 6.3% in Q3, compared with 4.6% for 9M; internal revenue growth was 5.9% and 4.1%, respectively. Q3 growth reflected higher collection and disposal yield, energy surcharges, recycling yield and volume, and renewable-energy volume. The 9M revenue increase included $768 million of average-yield growth and $43 million of organic volume growth; acquisitions added $101 million, divestitures reduced revenue by $14 million, and foreign currency added $10 million. Q3 average-yield growth was $326 million and organic volume growth was $53 million.

Operating income benefited from stronger pricing and efficiency, recycling and renewable-energy growth, Healthcare Solutions synergies, and comparison with $197 million of prior-year impairment charges. Q3 2026 included an $18 million impairment for accelerated closure of an East Tier landfill; Q3 2025 included impairments of $152 million related to suspended plastic-film recycling operations and $45 million for an East Tier landfill. For 9M, 2026 included a $34 million West Tier divestiture gain, while 2025 included a $16 million goodwill impairment in oil recovery/sludge processing. Higher fuel, labor, medical, maintenance and risk-management costs partly offset operating improvements. Q3 risk-management costs also compared with an insurance recovery in 2025 related to a 2022 transfer-station fire.

Business revenue and segment operating income

Amounts in millions; segment operating income is shown where reported.

Within Collection and Disposal, East Tier operating income was $771 million, versus $740 million, and West Tier was $766 million, versus $728 million. Other Ancillary operating income was $5 million versus zero. Corporate and Other costs increased, including technology, risk-management, wage and medical costs. Consolidated revenue excludes intercompany activity; Q3 intercompany revenue was $1.528 billion, and gross operating revenue including it was $8.374 billion.

Collection and Disposal average yield increased $171 million in Q3 and $533 million for 9M; municipal solid-waste landfill yield rose 4.2% and 5.3%, respectively. Energy surcharges and mandated fees increased $112 million in Q3 and $234 million for 9M, as diesel market prices rose approximately 50% and 40%, respectively. Organic volume growth was $53 million (0.8%) in Q3 and $43 million (0.2%) for 9M. Recycling and renewable-energy volumes benefited from automation, growth projects and new RNG plants, partly offset by lower commercial volumes and intentional shedding of lower-margin residential business.

Commodity trends were mixed: single-stream commodity prices rose 20% in Q3 but fell 7% for 9M. Recycling yield revenue increased $51 million in Q3 and $21 million for 9M, with higher processing fees more than offsetting 9M commodity declines. Renewable Energy yield revenue decreased $8 million in Q3 and $20 million for 9M, primarily because of lower RNG prices. Healthcare Solutions revenue was relatively unchanged in Q3 and declined $42 million (0.2%) for 9M as pricing was offset by lower volumes. WM says its operating model helps mitigate commodity-price downside, while noting short-term volatility.

Cash generation, investment and shareholder returns

Amounts in millions.

Higher earnings and favorable working capital supported 9M operating cash flow growth of 12.0%, partly offset by higher cash taxes. Lower capital spending reflected reduced collection-vehicle spending and planned reductions in sustainability investment as major projects move from peak construction toward generating returns. 9M capex comprised $1.746 billion of business-support spending and $191 million of sustainability-growth spending, compared with $1.910 billion and $429 million, respectively, in 2025. Acquisitions used $102 million of cash versus $403 million; divestiture proceeds primarily reflected a West Tier business in 2026 and Healthcare Solutions’ Spain and Portugal subsidiaries in 2025.

WM defines free cash flow as operating cash flow less capex plus net divestiture proceeds. It uses the measure to assess capacity for dividends, repurchases, acquisitions, investment and debt repayment, but notes it excludes committed or required uses including dividends and debt service. For 9M, net cash used in investing was $2.059 billion versus $2.699 billion; financing used $2.766 billion versus $1.830 billion. Debt borrowings of $18.644 billion and repayments of $18.668 billion resulted in $24 million of net repayments, versus $816 million in 2025. WM paid $1.583 billion for repurchases, with none in 2025, and $1.141 billion in dividends versus $1.001 billion; the quarterly dividend rose to $0.945 per share from $0.825.

Liquidity, debt and other considerations

At September 30, 2026, cash and cash equivalents were $247 million, versus $201 million at year-end 2025. Restricted funds and other totaled $711 million versus $622 million, including $566 million of insurance reserves, $144 million for landfill and environmental obligations, and $1 million of other funds.

Total debt was $23.370 billion, versus $22.907 billion at year-end 2025; $1.524 billion was current and $21.846 billion long-term. Approximately $4.4 billion comes due within 12 months, including $2.2 billion of tax-exempt bonds whose term-rate periods expire before scheduled maturity, $1.2 billion of commercial paper, $750 million of 4.95% senior notes due July 2027 and $211 million of other maturities. WM classified $2.9 billion as long-term based on its intent and ability to refinance, supported by a $3.5 billion U.S. and Canadian revolving credit facility. The company cites investment-grade ratings, unencumbered assets and modest leverage as support for financing access, and says it can adjust capex and repurchases during market disruption.

The alternative-fuel tax credit provided approximately $60 million of annual pretax benefit in 2024 but expired at year-end 2024. WM expects $400–$425 million of cumulative Section 48 investment tax credits, of which $309 million was recognized in 2023–2025, with the balance expected in 2026–2027. Following proposed IRS guidance in February 2026, WM expects up to $225 million of cumulative Section 45Z clean-fuel production tax credits through 2029; estimates depend on assumptions the company continues to monitor.

Key risks include fuel, labor and other inflation; volatile recycling and renewable-energy prices; landfill capacity, permitting and community opposition; environmental regulation and severe weather; and execution of Stericycle integration, technology, cybersecurity and AI initiatives. WM relies on pricing, productivity, cost control and automation to mitigate cost and volume pressures. The company also identifies landfill and remediation liabilities, impairments and acquisition-date fair values as significant areas of estimation uncertainty. WM Holdings and Waste Management, Inc. fully and unconditionally guarantee each other’s senior indebtedness; other subsidiaries do not.

As of September 30, 2026, WM reported no material change in its market risks from those discussed in Item 7A of its 2025 Form 10-K. This section identifies no additional market-risk metrics or developments.

Disclosure Controls and Procedures

As of September 30, 2026, management concluded that the company’s disclosure controls and procedures were effective at a reasonable-assurance level. During the quarter ended September 30, 2026, there were no changes in internal control over financial reporting that materially affected, or were reasonably likely to materially affect, those controls.

WM reported no material changes to the risk factors disclosed in Part I, Item 1A of its Form 10-K for the year ended December 31, 2025. The section identifies no new or materially changed risks.

Executive Rule 10b5-1 Trading Plans

Three executives adopted Rule 10b5-1(c) trading plans in September 2026. Planned transactions are conditional on WM’s share price reaching specified levels.

• John J. Morris, Jr. adopted a plan on September 5, 2026, covering transactions from February 1 through December 31, 2027, or until completed. It permits the sale of up to 67% of the net after-tax shares from his PSU award for the performance period ended December 31, 2026. His target grant was 12,164 PSUs; the award may range from zero to 200% of target. The number of shares available for sale will be determined after performance certification in Q1 2027.
• Michael J. Watson adopted a plan on September 5, 2026, covering transactions from January 4 through December 31, 2027, or until completed. It permits cashless exercise of up to 8,321 options, with shares sold to cover the exercise price, taxes, commissions and fees, and remaining proceeds delivered to him. It also permits sale of all net after-tax shares from his PSU award for the performance period ended December 31, 2026. His target grant was 5,856 PSUs, with a payout ranging from zero to 200% of target; the saleable share count will be determined after performance certification in Q1 2027.
• Charles Boettcher adopted a plan on September 8, 2026, covering transactions from December 8, 2026 through December 31, 2027, or until completed. It permits the sale of up to 20,000 common shares and cashless exercise of three option awards totaling 39,654 options. Shares will be sold to cover exercise prices, taxes, commissions and fees, with remaining proceeds delivered to him.

These are prospective trading arrangements; the plans do not report realized sales or a change in WM’s financial results or operations.