Core Insights - WM reported strong second-quarter 2025 results, with adjusted earnings of $1.92 per share, exceeding the Zacks Consensus Estimate by 1.6% and reflecting a year-over-year increase of 5.5% [1][8] - Total revenues reached $6.4 billion, surpassing the consensus mark by 1.4% and showing a 19% increase compared to the same quarter last year [1][8] - The stock has appreciated by 13% year-to-date, outperforming the industry growth of 10.7% and the Zacks S&P 500 Composite's rise of 8.2% [1] Revenue Breakdown - The Collection segment generated revenues of $4.4 billion, a 5.2% increase year-over-year, but fell short of the estimate of $4.7 billion [2] - The Landfill segment's revenues grew by 14.5% year-over-year to $1.4 billion, meeting expectations [2] - The Transfer segment's revenues increased by 10.2% to $681 million, missing the estimate of $692.5 million [2] - The Recycling Processing and Sales segment saw revenues rise by 1.5% to $482 million, which was below the estimated $535.8 million [2] - WM Renewable Energy reported revenues of $115 million, a significant 64.3% increase from the previous year, exceeding the estimate of $95.3 million [3] - WM Healthcare Solutions Corporate and Other generated $647 million, slightly up from the previous year and beating the estimate of $291.1 million [3] Operating Performance - Adjusted operating EBITDA was reported at $1.9 billion, aligning with expectations, while the adjusted operating EBITDA margin decreased by 10 basis points to 29.9% from the previous year, surpassing the estimate of 29.5% [4] Cash Flow - WM generated $1.5 billion in cash from operating activities during the quarter, with capital expenditures amounting to $732 million, resulting in free cash flow of $818 million [5] - The company distributed $333 million in cash dividends to shareholders in the second quarter of 2025 [5] 2025 Outlook - Due to a decline in recycled commodity prices and reduced Collection and Disposal volumes in Q1 2025, WM has lowered its revenue guidance to a range of $25.27 billion to $25.47 billion, down from the previous range of $25.55 billion to $25.80 billion, which is below the consensus mark of $25.53 billion [6] - The adjusted operating EBITDA is anticipated to be between $7.47 billion and $7.62 billion, compared to the previous quarter's guidance of $7.45 billion to $7.65 billion [6]

Financial Data and Key Metrics Changes - The company reported a 19% growth in operating EBITDA for Q2 2025, driven primarily by the collection and disposal business [9][10] - Operating EBITDA margin for the total company approached 30%, with the legacy business achieving a margin of 31.3% [22][24] - Operating cash flow increased by 9% year-over-year to $2.75 billion, reflecting strong earnings growth [24] Business Line Data and Key Metrics Changes - Collection and disposal operating EBITDA improved by 60 basis points to 37.9%, supported by strong landfill volumes and customer lifetime value initiatives [17][22] - The recycling segment saw a 17% increase in operating EBITDA despite a nearly 15% decline in recycled commodity prices [12][22] - The healthcare solutions segment improved operating EBITDA margins by 190 basis points since acquisition, indicating effective integration and cost optimization [23] Market Data and Key Metrics Changes - Landfill volumes were particularly strong, benefiting from wildfire cleanup efforts in California, contributing to solid waste volume growth [10][12] - The company expects full-year volume growth to remain between 0.25% and 0.75% despite some challenges from contract losses [18][34] - Core price remained healthy at 6.4%, with collection and disposal yield improving sequentially to 4.1% [17][22] Company Strategy and Development Direction - The company is focused on leveraging technology to optimize cost structures and enhance customer lifetime value, positioning itself as a leader in the waste management industry [9][10] - WM is actively pursuing acquisitions to scale its core business, with an expected acquisition spending of over $500 million for the year [11] - The sustainability platform continues to differentiate WM in the industry, with ongoing investments in recycling and renewable energy [12][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong results despite external challenges, emphasizing a disciplined strategy aligned with secular trends [9][10] - The company anticipates less pressure from the healthcare solutions business in the second half of the year, with expected margin improvements [32] - Management remains optimistic about achieving the upper end of synergy targets from the healthcare solutions acquisition, projecting $80 million to $100 million in synergies for 2025 [23][64] Other Important Information - The company confirmed and updated its 2025 guidance, affirming the midpoint of operating EBITDA guidance at $7.55 billion and increasing free cash flow expectations to between $2.8 billion and $2.9 billion [26][25] - The leverage ratio at the end of the quarter was 3.5 times, with a focus on returning to targeted leverage levels through earnings growth and debt reduction [25] Q&A Session Summary Question: Is a 31% peak margin in Q3 back on the table? - Management indicated that margin expansion exceeded expectations in the first half, projecting about 110 basis points for the full year, with less pressure from the healthcare solutions business in the second half [31][32] Question: What are the updated volume expectations for the year? - Management confirmed expectations for volume growth to remain between 0.25% and 0.75%, with the impact of wildfire cleanup and contract losses factored in [34][41] Question: Can you provide more color on the strength in volume? - Management noted that June was the strongest month of the quarter, with solid performance in MSW and C&D waste streams, despite some challenges in the commercial sector [37][38] Question: What is the status of the residential business optimization? - Management reported that about 70% of the residential business is now performing at acceptable margins, with expectations for continued improvement [49][50] Question: What are the long-term growth expectations for WM Healthcare? - Management anticipates long-term top-line growth of 5% to 6%, focusing on optimizing customer relationships and improving revenue quality [70][72]

Financial Data and Key Metrics Changes - The company reported a 19% growth in operating EBITDA for the second quarter, driven by strong results across all market cycles [7][20] - Operating cash flow increased by 9% year-over-year to $2.75 billion, attributed to strong earnings growth [22] - Free cash flow for the first half of the year was $1.29 billion, with expectations to meet or exceed revised guidance for the year [23][25] Business Line Data and Key Metrics Changes - The collection and disposal business contributed significantly to EBITDA growth, with landfill volumes showing strong performance [8][14] - Collection and disposal operating EBITDA margin improved by 60 basis points to 37.9%, driven by strong landfill volumes and customer lifetime value focus [14][20] - The recycling segment saw a 17% increase in operating EBITDA despite a nearly 15% decline in recycled commodity prices [10][20] Market Data and Key Metrics Changes - The company experienced solid waste volume growth in key markets, particularly in MSW and special waste volumes related to wildfire cleanup in California [8][10] - The overall volume expectations for the year remain between 0.25% and 0.75% growth, with a notable impact from a large franchise contract loss [15][34] Company Strategy and Development Direction - The company is focused on long-term growth through technology implementation and acquisitions, with a robust pipeline of tuck-in opportunities expected to exceed $500 million in acquisition spending for the year [9][11] - The integration of WM HealthCare Solutions is progressing well, with targeted synergies expected to reach $80 million to $100 million in 2025 [21][61] - The company aims to maintain its competitive edge through sustainability investments and operational excellence [10][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong results despite external challenges, including recycled commodity prices and weather impacts [25][26] - The company anticipates less pressure from the Healthcare Solutions business in the second half of the year, with margin improvements expected [30][34] - Overall, management remains optimistic about achieving long-term strategic priorities and maintaining strong earnings growth [26][25] Other Important Information - The company achieved a record operating expense ratio below 60% of revenue, reflecting significant progress in cost management [16][20] - The company is on track to achieve targeted leverage levels by 2026 through a combination of earnings growth and debt reduction [23][25] Q&A Session Summary Question: Is a 31% peak margin in Q3 back on the table? - Management indicated that margin expansion exceeded expectations in the first half, making them optimistic about margins for the second half of the year [29] Question: What are the updated volume expectations for the year? - Volume expectations remain between 0.25% and 0.75%, with the company confident in achieving this despite some headwinds [34] Question: Can you provide more color on the strength in volume? - June was the strongest month of the quarter, with solid performance in MSW and C&D waste streams, indicating a positive trend [37][39] Question: How is the residential business improvement journey progressing? - About 70% of the residential business is now performing at acceptable margins, with expectations for further improvement by the end of the year [46][48] Question: What are the expectations for the Healthcare Solutions business? - The company is focused on optimizing the Healthcare Solutions business, with long-term growth expectations of 5% to 6% [68][70]

Group 1 - WM, formerly known as Waste Management, Inc., has seen a solid performance with a 14% increase in shares over the past year [1] - The company's strong cash flow and lower economic cyclicality contribute to its attractiveness as an investment [1]

Core Insights - Waste Management reported better-than-expected Q2 2025 results with adjusted EPS of $1.92, exceeding the $1.89 estimate, and GAAP revenue of $6.43 billion, surpassing the $6.36 billion consensus, indicating strong operational performance and integration of acquired businesses [1][2] Financial Performance - Adjusted EPS (Non-GAAP) increased by 5.5% year-over-year from $1.82 to $1.92 [2] - GAAP revenue rose 19.0% year-over-year from $5.40 billion to $6.43 billion [2] - Adjusted Operating EBITDA reached $1.92 billion, an 18.8% increase from $1.62 billion in Q2 2024 [2] - Free Cash Flow (Non-GAAP) significantly increased by 54.3% year-over-year to $818 million [2] Business Overview - Waste Management operates in waste collection, processing, recycling, and disposal across North America, serving various sectors including municipalities and healthcare [3] - The company has focused on sustainability projects and has expanded through mergers and acquisitions, particularly in the healthcare sector [4] Operational Highlights - The core collection and disposal business generated $5.78 billion in revenue, up 7.1%, with an adjusted EBITDA margin of 31.3% [5] - Renewable energy projects contributed to double-digit operating EBITDA gains despite a decline in average prices for renewable credits and recycled commodities [6] - The Healthcare Solutions segment generated $646 million in revenue, with ongoing integration efforts improving margins [7] Strategic Initiatives - The company is investing in automation and technology, leading to workforce reductions but aiming for improved efficiency and safety [11] - Waste Management is on track to achieve targeted synergies of $80 to $100 million for fiscal 2025, with a long-term goal of $300 million in run-rate EBITDA synergies by 2027 [7] Outlook - Management reaffirmed full-year targets, with adjusted operating EBITDA guidance at $7.55 billion and free cash flow guidance raised to $2.8–2.9 billion for fiscal 2025 [12] - Revenue outlook for 2025 was adjusted to $25.28–$25.48 billion due to lower recycling commodity prices [12] - Investors should monitor the development of the healthcare segment and the impact of commodity prices on earnings [13]

Core Insights - Waste Management (WM) reported quarterly earnings of $1.92 per share, exceeding the Zacks Consensus Estimate of $1.89 per share, and up from $1.82 per share a year ago, representing an earnings surprise of +1.59% [1] - The company generated revenues of $6.43 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.39%, and up from $5.4 billion year-over-year [2] - Waste Management shares have increased approximately 13.8% year-to-date, outperforming the S&P 500's gain of 8.6% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.07 on revenues of $6.58 billion, and for the current fiscal year, it is $7.57 on revenues of $25.53 billion [7] - The estimate revisions trend for Waste Management was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Waste Removal Services industry, to which Waste Management belongs, is currently ranked in the top 39% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Another competitor in the industry, Republic Services (RSG), is expected to report quarterly earnings of $1.75 per share, reflecting a year-over-year increase of +8.7%, with revenues projected at $4.27 billion, up 5.4% from the previous year [9][10]

[WM Second Quarter 2025 Earnings Release](index=1&type=section&id=WM%20Second%20Quarter%202025%20Earnings%20Release) [Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) WM reported strong Q2 2025 results with significant growth in revenue and operating cash flow, driven by core business performance and strategic acquisitions Q2 2025 Key Financial Metrics (As Adjusted) | Metric | Q2 2025 (As Adjusted) | Q2 2024 (As Adjusted) | Change | | :--- | :--- | :--- | :--- | | Revenue | $6,430 million | $5,402 million | +19.0% | | Operating EBITDA | $1,923 million | $1,618 million | +18.8% | | Operating EBITDA Margin | 29.9% | 30.0% | -10 bps | | Net Income | $777 million | $732 million | +6.1% | | Diluted EPS | $1.92 | $1.82 | +5.5% | - CEO Jim Fish highlighted **robust organic revenue growth and margin expansion** in the Collection and Disposal business, which achieved its best-ever operating expense margin[2](index=2&type=chunk) - Both the Recycling Processing and Sales and WM Renewable Energy segments experienced **double-digit operating EBITDA growth**, driven by investments in sustainability businesses[2](index=2&type=chunk) - The company released its 2025 Sustainability Report, noting a **22% reduction in greenhouse gas emissions** since 2021[2](index=2&type=chunk) [Business Segment Performance](index=2&type=section&id=Business%20Segment%20Performance) The WM Legacy Business showed strong performance with adjusted operating EBITDA growth, while the newly integrated WM Healthcare Solutions is on track to meet synergy targets Q2 2025 Adjusted Operating EBITDA by Segment ($ in millions) | Segment | Q2 2025 Adjusted Operating EBITDA | Margin | | :--- | :--- | :--- | | WM Legacy Business | $1,813 | 31.3% | | WM Healthcare Solutions | $110 | 17.0% | | **Total Company** | **$1,923** | **29.9%** | Q2 2025 Revenue by Segment ($ in millions) | Segment | Q2 2025 Revenue | Growth | | :--- | :--- | :--- | | WM Legacy Business | $5,784 | 7.1% | | WM Healthcare Solutions | $646 | N/A | | **Total Company** | **$6,430** | **19.0%** | - The WM Legacy Business's Collection and Disposal segment achieved an **adjusted margin of 37.9%**, driven by organic growth, cost discipline, and optimized business mix[3](index=3&type=chunk) - WM Healthcare Solutions is on track to achieve the upper end of its targeted synergies of **$80 to $100 million in 2025**[4](index=4&type=chunk) [Cash Flow and Investments](index=3&type=section&id=Cash%20Flow%20and%20Investments) The company generated $2.75 billion in operating cash flow and $1.29 billion in free cash flow in H1 2025, despite increased capital spending on strategic projects Cash Flow Summary - First Half 2025 ($ in millions) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,753 | $2,521 | | Capital expenditures | ($1,563) | ($1,335) | | Free cash flow | $1,293 | $1,244 | - Strong operating EBITDA growth drove the increase in operating cash flow, which was partially offset by **higher cash interest** related to the Stericycle acquisition funding[11](index=11&type=chunk) - During the quarter, **three growth projects commenced operations**: a new renewable natural gas facility in Illinois, a recycling automation project in Pennsylvania, and a new market recycling facility in Oregon[11](index=11&type=chunk) [Sustainability and WM Healthcare Solutions Update](index=3&type=section&id=Sustainability%20and%20WM%20Healthcare%20Solutions%20Update) The company is advancing its sustainability initiatives and the integration of WM Healthcare Solutions is progressing well, with significant synergies expected by 2027 - The company has completed **8 of 20 planned renewable natural gas (RNG) facilities** and **29 of 39 planned recycling automation and new market projects**[11](index=11&type=chunk) - Integration of WM Healthcare Solutions has identified **$50 million in operating EBITDA opportunities** from cross-selling, with $11 million already secured[11](index=11&type=chunk) - Anticipated run-rate synergies from the healthcare business, including cross-selling, are expected to total **$300 million of operating EBITDA by 2027**[11](index=11&type=chunk) [2025 Outlook](index=3&type=section&id=2025%20Outlook) WM affirmed its full-year EBITDA guidance and raised its free cash flow projection, while slightly lowering its revenue forecast due to commodity price declines Updated Full-Year 2025 Guidance | Metric | Updated 2025 Guidance | Prior Guidance/Note | | :--- | :--- | :--- | | Total Company Revenue | $25.275B - $25.475B | Decreased due to commodity prices | | Adjusted Operating EBITDA | $7.475B - $7.625B | Midpoint of $7.550B affirmed | | Adjusted Operating EBITDA Margin | 29.6% - 29.9% | Increased from 29.2% - 29.7% | | Free Cash Flow | $2.8B - $2.9B | Increased by $125M | - The free cash flow outlook was increased by **$125 million**, driven by recently enacted tax policy that restores bonus depreciation to 100%[11](index=11&type=chunk) - The revenue outlook was lowered primarily due to a recent decline in recycled commodity prices, which is expected to average **$80/ton for the year**, down from the previous expectation of $85/ton[11](index=11&type=chunk)[15](index=15&type=chunk) [Consolidated Financial Statements](index=8&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements detail the company's performance, showing H1 2025 operating revenues of $12.45 billion and net income of $1.36 billion [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, WM reported operating revenues of $6.43 billion and net income attributable to the company of $726 million, both up from the prior-year period Q2 2025 Statement of Operations Highlights ($ in millions) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Operating revenues | $6,430 | $5,402 | | Income from operations | $1,151 | $1,009 | | Net income attributable to WM | $726 | $680 | | Diluted EPS | $1.80 | $1.69 | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's total assets stood at $45.72 billion and total equity increased to $9.20 billion from year-end 2024 Balance Sheet Highlights ($ in millions) | Line Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $4,984 | $4,774 | | Total assets | $45,722 | $44,567 | | Total current liabilities | $5,816 | $6,258 | | Long-term debt | $23,056 | $22,541 | | Total equity | $9,202 | $8,254 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, net cash from operating activities increased to $2.75 billion from $2.52 billion in the prior-year period Six Months Ended June 30 Cash Flow Highlights ($ in millions) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,753 | $2,521 | | Net cash used in investing activities | ($1,915) | ($2,359) | | Net cash used in financing activities | ($781) | ($464) | [Supplemental Data and Non-GAAP Reconciliations](index=11&type=section&id=Supplemental%20Data%20and%20Non-GAAP%20Reconciliations) This section provides detailed financial data breakdowns and reconciles non-GAAP measures to their most comparable GAAP counterparts for transparency Q2 2025 vs Q2 2024 Internal Revenue Growth | Driver | % of Related Business (Yield) | % of Related Business (Volume) | | :--- | :--- | :--- | | Commercial | 5.3% | (0.1)% | | Industrial | 3.8% | (1.2)% | | Residential | 5.7% | (5.7)% | | **Total Collection and Disposal** | **4.1%** | **1.6%** | Q2 2025 Reconciliation of GAAP Net Income to Adjusted Net Income ($ in millions) | Description | Amount | | :--- | :--- | | **As reported Net Income** | **$726** | | Stericycle acquisition and integration-related costs | $29 | | Loss from asset impairments, unusual items and other, net | $22 | | **As adjusted Net Income** | **$777** | - The report provides supplemental information to illustrate the impact of differing accounting treatments for recycling commodity rebates and landfill accretion expense to enhance comparability with peers[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)

Group 1 - Waste Management, Inc. is set to release its second-quarter earnings results on July 28, with expected earnings of $1.89 per share, an increase from $1.82 per share in the same period last year [1] - The company is projected to report quarterly revenue of $6.36 billion, up from $5.4 billion a year earlier [1] - John Morris has been appointed as President of Waste Management as of May 14 [1] Group 2 - Waste Management shares experienced a decline of 0.4%, closing at $229.67 [2] - Analysts have provided various ratings and price targets for Waste Management, with Raymond James maintaining an Outperform rating and raising the price target from $255 to $256 [4] - Oppenheimer also maintained an Outperform rating, increasing the price target from $255 to $260 [4] - Scotiabank raised its price target from $260 to $265 while maintaining a Sector Outperform rating [4] - RBC Capital reiterated a Sector Perform rating with a price target of $229 [4] - BMO Capital maintained a Market Perform rating and raised the price target from $241 to $245 [4]

Company Performance - Waste Management (WM) closed at $230.61, marking a +1.09% move from the prior day, outperforming the S&P 500 which gained 0.07% [1] - The stock has fallen by 0.2% in the past month, lagging behind the Business Services sector's gain of 1.45% and the S&P 500's gain of 5.71% [1] Upcoming Earnings - The upcoming earnings release is expected on July 28, 2025, with projected EPS of $1.89, indicating a 3.85% increase year-over-year [2] - Revenue is projected at $6.34 billion, reflecting a 17.4% increase compared to the same quarter of the previous year [2] Full-Year Estimates - Full-year Zacks Consensus Estimates predict earnings of $7.57 per share and revenue of $25.53 billion, representing year-over-year changes of +4.7% and +15.73%, respectively [3] - Recent analyst estimate revisions are seen as a positive sign for the business outlook [3] Zacks Rank and Valuation - Waste Management currently holds a Zacks Rank of 3 (Hold), with a recent 0.11% fall in the Zacks Consensus EPS estimate [5] - The company is trading at a Forward P/E ratio of 30.13, which is a premium compared to its industry's Forward P/E of 27.94 [6] - WM's PEG ratio is 2.83, compared to the industry average PEG ratio of 2.59 [6] Industry Context - The Waste Removal Services industry is part of the Business Services sector, holding a Zacks Industry Rank of 158, placing it in the bottom 37% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Viewpoint - Wall Street analysts anticipate Waste Management (WM) to report quarterly earnings of $1.89 per share, reflecting a year-over-year increase of 3.9%, with revenues expected to reach $6.34 billion, up 17.4% from the previous year [1] Earnings Estimates - Changes in earnings estimates are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate revisions and short-term stock performance [2] - The consensus EPS estimate for the quarter has been revised downward by 0.8% over the past 30 days, indicating a collective reassessment by analysts [1] Key Metrics Projections - Analysts project 'Operating revenues- WM Renewable Energy' at $99.63 million, a 44.4% increase from the year-ago quarter [4] - 'Operating revenues- Recycling' is expected to reach $439.11 million, indicating an 8.4% increase from the prior-year quarter [4] - The estimate for 'Operating revenues- Corporate and Other' is $5.69 million, reflecting a decrease of 5.3% from the year-ago quarter [4] Internal Revenue Growth - The average prediction for 'Internal Revenue Growth - Total - As a % of Total Company' is 18.0%, compared to 5.5% reported in the same quarter last year [5] - 'Internal Revenue Growth - Internal revenue growth - As a % of Total Company' is estimated at 6.1%, up from 5.3% in the previous year [5] Stock Performance - Waste Management shares have decreased by 3% over the past month, contrasting with a 5.9% increase in the Zacks S&P 500 composite [6] - WM holds a Zacks Rank 3 (Hold), suggesting it is expected to perform in line with the overall market in the near future [6]