Core Insights - Waste Management, Inc. (WM) is a leading provider of waste management services in North America, offering collection, transfer, recycling, and disposal services [1] - Oppenheimer has set a price target of $264 for WM, indicating a potential price increase of 18.32% from its current price of $223.13 [1][5] - AlphaQuest LLC has increased its investment in WM by 131.8%, reflecting strong confidence in the company's future performance [2][5] Market Performance - WM's current stock price is $223.13, which represents a decrease of 3.66% or $8.47, with fluctuations during the trading day ranging from a low of $220.84 to a high of $231.67 [3] - Over the past year, WM's stock has reached a high of $242.58 and a low of $194.11, indicating volatility in the stock market [3] - WM's market capitalization is approximately $89.89 billion, showcasing its significant presence in the waste management industry [4][5] Investor Interest - The trading volume on the NYSE for WM is 3,670,753 shares, indicating active investor interest [4] - Other investment firms, such as Cornercap Investment Counsel Inc. and Wealthfront Advisers LLC, have also adjusted their positions in WM, reflecting broader interest in the company's potential [2]

Market Overview - The Solid Control Drilling Waste Management Market was valued at USD 1.50 billion in 2025 and is projected to reach USD 3.23 billion by 2035, growing at a CAGR of 8.06% from 2026 to 2035 [1][5]. Market Drivers - The increase in global oil and gas drilling activities is driving the demand for effective solid control and waste management systems due to the significant amount of drilling waste produced [1]. - Companies are focusing on implementing advanced separation technology and treatment solutions to manage contaminated drilling fluids and materials safely [1]. - Environmental protection regulations are encouraging operators to adopt eco-friendly disposal methods, further boosting market demand [1]. Key Market Segmentation By Waste Type - Contaminated Oil Based Muds held a dominant market share of approximately 58% in 2025, attributed to the large volume of hazardous muds generated from oil and gas drilling operations [6]. - The Waste Lubricants segment is expected to grow at the fastest CAGR from 2026 to 2035 due to increasing drilling operations and stricter environmental regulations [6]. By Application - The Onshore segment dominated the market with around 61% share in 2025, driven by the high number of land-based drilling projects [7]. - The Offshore segment is anticipated to grow at the fastest CAGR from 2026 to 2035, fueled by increasing deepwater and offshore oil and gas exploration activities [7]. By End-Use - The Oil & Gas sector accounted for approximately 69% of the market share in 2025, due to extensive use of drilling fluids and high-volume waste generation [8]. - The Geothermal Energy segment is projected to grow at the fastest CAGR from 2026 to 2035, driven by a rising focus on renewable energy and increasing geothermal drilling projects [8]. By Service Type - Solid Control services represented about 41% of the market in 2025, as they are essential for separating solids from drilling fluids [9]. - The Waste Treatment & Disposal segment is expected to experience the fastest growth from 2026 to 2035, driven by increasing environmental regulations and sustainability initiatives [9]. Regional Insights - North America led the market with a revenue share of approximately 38% in 2025, due to extensive oil and gas drilling activities in the U.S. and Canada [11]. - The Asia Pacific region is expected to grow at the fastest CAGR of about 9.39% from 2026 to 2035, driven by rising oil and gas exploration activities and growing investments in drilling infrastructure [11]. Competitive Landscape - Key players in the market include Schlumberger, Halliburton, Baker Hughes, Weatherford International, and others [4]. - Recent developments include TWMA securing a $15 million drilling waste management contract for BP's Mediterranean project and Schlumberger partnering with Cactus Drilling to optimize drilling operations [15].

Core Insights - WM reported disappointing fourth-quarter 2025 results, with adjusted earnings of $1.93 per share missing the consensus estimate by 1% and total revenues of $6.3 billion also falling short by 1.2% while showing a year-over-year increase of 7.1% [1][8] Financial Performance - The Collection segment generated revenues of $3.9 billion, a 4.9% increase year-over-year, meeting the Zacks Consensus Estimate [2] - The Landfill segment reported revenues of $910 million, a 6.2% year-over-year increase, but missed the consensus estimate of $956.1 million [2] - The Transfer segment's revenues grew 6.1% to $381 million, surpassing the consensus mark of $375.1 million [2] - The Recycling Processing and Sales segment saw revenues decline by 10.8% to $355 million, missing the Zacks Consensus Estimate of $414.3 million [2] - WM Renewable Energy achieved revenues of $157 million, a significant 68.8% increase year-over-year, exceeding the consensus mark of $148 million [3] - The combined revenues from WM Healthcare Solutions and Corporate and Other segments totaled $621 million, reflecting a 52.2% year-over-year growth but missing the consensus estimate of $627 million [3] - Adjusted operating EBITDA was $2 billion, up 15.7% from the previous year, with an adjusted operating EBITDA margin increasing by 240 basis points to 31.3% [4] Cash Flow and Dividends - WM generated $1.7 billion in cash from operating activities in Q4 2025, with capital expenditures of $684 million and free cash flow of $823 million [5] - The company distributed $333 million in cash dividends to shareholders during the fourth quarter [5] 2026 Outlook - For 2026, WM expects revenues between $26.43 billion and $26.63 billion, with the midpoint of $26.53 billion being lower than the Zacks Consensus Estimate of $26.59 billion [6] - Adjusted operating EBITDA is projected to be between $8.15 billion and $8.25 billion [6] - WM currently holds a Zacks Rank 3 (Hold) [6]

Financial Data and Key Metrics Changes - The company reported a record performance in operating expenses as a percentage of revenue, with Operating EBITDA margin increasing by 150 basis points in the legacy business [8] - Full-year cash flow from operations grew by double digits, and free cash flow increased by nearly 27% [8][12] - Operating EBITDA margin expanded by 40 basis points to 30.1% for the full year, overcoming a 140 basis point margin headwind from the acquisition of the Healthcare Solutions business [22] Business Line Data and Key Metrics Changes - The collection and disposal business saw Operating EBITDA growth of more than 8% in Q4, with a margin expansion of 160 basis points [15] - The Healthcare Solutions business improved service delivery metrics and customer service scores, with SG&A expenses for this segment decreasing to 20.8% of revenue in Q4, a 350 basis point improvement from the prior year [24] Market Data and Key Metrics Changes - The company experienced notable growth in special waste, renewable energy, and recycling, while residential collection volume showed signs of improvement [21] - The pricing environment remained healthy, with core price growth of 6.2% in Q4 [20] Company Strategy and Development Direction - The company plans to focus on growing its core business, maximizing returns from recycling and renewable energy investments, and driving growth in healthcare solutions [13] - A new $3 billion share repurchase program was authorized, alongside a 14.5% increase in the planned quarterly dividend rate for 2026 [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the macroeconomic environment, noting signs of recovery in the industrial line of business and expectations for steady residential volume improvement [31][35] - The company anticipates Operating EBITDA growth of 6.2% at the midpoint for 2026, with free cash flow expected to grow nearly 30% [12][27] Other Important Information - The company completed automation upgrades at five recycling facilities and added facilities in four new markets, enhancing the performance of its recycling network [11] - The company expects to return about $3.5 billion to shareholders through dividends and share repurchases in 2026, representing over 90% of expected free cash flow [13] Q&A Session Summary Question: Can you provide perspective on the top-line guidance and the macro backdrop? - Management remains cautiously optimistic about the macroeconomy, noting a recovery in the industrial line of business and signs of improvement in residential volumes [31][32] Question: Can you discuss the integration of the Healthcare Solutions business and pricing initiatives? - Significant progress has been made in customer service metrics, with expectations for better price realization in 2026 as the integration continues [37][39] Question: What is the outlook for 2026 in terms of healthcare solutions and cost synergies? - The company expects 4.2% price growth and 3% top-line growth in healthcare solutions, with ongoing efforts to reduce SG&A expenses [39][85] Question: Can you clarify the decision regarding 2027 financial targets? - Management indicated that detailed guidance for 2027 will be provided a year from now, emphasizing the difficulty of predicting long-term performance [46][47] Question: What is the expected margin expansion in the collection and disposal business for 2026? - The target for margin improvement across the portfolio is approximately 50 basis points on a same-store sales basis [49]

Financial Data and Key Metrics Changes - The company reported a record performance in operating expenses as a percentage of revenue, with Operating EBITDA margin increasing by 150 basis points in the legacy business [8][12] - Full-year Operating EBITDA margin reached 30.1%, despite a 140 basis point headwind from the acquisition of the Healthcare Solutions business and the expiration of alternative fuel tax credits [22][24] - Cash flow from operations grew more than 12% to $6.04 billion, and free cash flow increased by nearly 27% to $2.94 billion [24][28] Business Line Data and Key Metrics Changes - The Collection and Disposal business saw Operating EBITDA growth of over 8% in Q4, with a margin expansion of 160 basis points [15][21] - The Recycling segment delivered over 22% Operating EBITDA growth, despite nearly 20% lower commodity prices [11][24] - The Healthcare Solutions business improved its SG&A expenses to 20.8% of revenue in Q4, a notable improvement of 350 basis points from the prior year [24] Market Data and Key Metrics Changes - The company observed a bounce back in the industrial line of business, which had been down 3% to 4% in volume for several quarters, now nearing flat [31][32] - Residential collection volume is expected to improve steadily as the company moves through 2026 [21][32] - The landfill line of business has been a source of strength, with special waste performing well [35] Company Strategy and Development Direction - The company plans to focus on growing the core business by leveraging customer lifetime value, operational excellence, and network advantages [13] - There is a commitment to capturing returns from investments in Recycling and Renewable Energy businesses, as well as driving growth in healthcare solutions [13][28] - The company has authorized a new $3 billion share repurchase program and plans to return about $3.5 billion to shareholders through dividends and share repurchases in 2026 [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the macroeconomic environment, indicating a firm footing for the economy [31][35] - The company expects continued strong growth in 2026, with guidance for Operating EBITDA growth of 6.2% at the midpoint [12][26] - The company anticipates free cash flow growth of nearly 30% in 2026, reflecting structural earnings strength [12][27] Other Important Information - The company has made significant progress in integrating the Healthcare Solutions business, with improved customer service metrics now exceeding those of the legacy business [10][37] - The company is focused on reducing SG&A expenses across all business lines, aiming to bring total company SG&A below 10% [24][56] Q&A Session Summary Question: Insights on top-line guidance and industrial activity - Management remains cautiously optimistic about the macroeconomic environment, noting a bounce back in the industrial line of business [31][32] Question: Pricing and cost refinement in Healthcare Solutions - Management highlighted significant progress in customer service and expects better price realization in 2026, with a projected 4.2% price increase [39][41] Question: Discussion on 2027 financial targets - Management clarified that 2027 estimates were not detailed guidance and emphasized the difficulty in predicting long-term performance [46][47] Question: Margin expansion expectations for Collection and Disposal - Management targets a 50 basis point margin improvement on a same-store sales basis across the portfolio [49] Question: Outlook for Healthcare Solutions EBITDA and cost synergies - Management reported exceeding synergy goals for 2025 and expects continued benefits in 2026 [53][54]

Financial Data and Key Metrics Changes - The company reported a record performance in operating expenses as a percentage of revenue, with Operating EBITDA margin increasing by 150 basis points in the legacy business for the full year [6][20] - Cash flow from operations grew by double digits, reaching $6.04 billion, while free cash flow increased by nearly 27% to $2.94 billion [6][24] - Operating EBITDA margin for the full year expanded by 40 basis points to 30.1%, overcoming a 140 basis point headwind from the acquisition of the Healthcare Solutions business [20][24] Business Line Data and Key Metrics Changes - The collection and disposal business saw Operating EBITDA growth of more than 8% in Q4, with a margin expansion of 160 basis points [14] - The Healthcare Solutions segment improved service delivery metrics and customer satisfaction, with SG&A expenses decreasing to 20.8% of revenue in Q4, a 350 basis point improvement from the prior year [23][9] - The recycling segment delivered over 22% Operating EBITDA growth despite nearly 20% lower commodity prices [10] Market Data and Key Metrics Changes - The company experienced notable growth in special waste, renewable energy, and recycling volumes in 2025, while residential collection volumes showed signs of improvement [19] - The industrial line of business, which had been soft, showed signs of recovery, bouncing back to nearly flat volumes [31] - The landfill business remained a source of strength, contributing positively to overall performance [34] Company Strategy and Development Direction - The company plans to focus on growing its core business by leveraging customer lifetime value, operational excellence, and network advantages [12] - Strategic investments in sustainability include commissioning 7 new renewable natural gas facilities and upgrading recycling facilities, enhancing performance and creating new customer opportunities [10] - The company aims to balance shareholder returns with disciplined reinvestment and tuck-in M&A, targeting a leverage ratio between 2.5 and 3 times by 2026 [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the macroeconomic environment, noting improvements in various business lines and a positive outlook for 2026 [31][34] - The company expects Operating EBITDA growth of 6.2% at the midpoint for 2026, with free cash flow projected to grow nearly 30% [11][26] - Management highlighted the importance of operational excellence and strategic investments in driving long-term shareholder value [12][27] Other Important Information - The board approved a 14.5% increase in the planned quarterly dividend rate for 2026, marking the 23rd consecutive year of dividend growth [11] - The company authorized a new $3 billion share repurchase program, planning to return about $3.5 billion to shareholders through dividends and repurchases in 2026 [12] Q&A Session Summary Question: Can you provide perspective on the macro backdrop and industrial activity? - Management remains optimistic about the macroeconomy, noting a recovery in the industrial line of business and improvements in residential volumes [31][34] Question: What are the expectations for pricing and cost refinement in the Healthcare Solutions segment? - Management indicated progress in customer service and expects better price realization in 2026, with a projected 4.2% price increase [36][38] Question: Can you clarify the decision to hold off on 2027 financial targets? - Management stated that 2027 estimates were not detailed guidance and emphasized the consistency of performance as a strength [45][46] Question: What level of margin expansion is expected in the collection and disposal business for 2026? - Management targets a 50 basis point margin improvement on a same-store sales basis across the portfolio [49] Question: How much cost synergy capture was realized in 2025, and what is expected for 2026? - Management reported exceeding synergy goals in 2025 and anticipates continued benefits in 2026, particularly in SG&A expenses [55][58]

Core Insights - Waste Management (WM) reported revenue of $6.31 billion for the quarter ended December 2025, reflecting a year-over-year increase of 7.1% [1] - The earnings per share (EPS) for the quarter was $1.93, up from $1.70 in the same quarter last year [1] - Revenue fell short of the Zacks Consensus Estimate of $6.39 billion, resulting in a surprise of -1.21% [1] - The EPS also missed the consensus estimate of $1.95, with a surprise of -1.03% [1] Financial Performance Metrics - Internal Revenue Growth for the total company was 7.1%, compared to an average estimate of 8.1% from six analysts [4] - Volume growth as a percentage of total company revenue was 0.7%, exceeding the four-analyst average estimate of 0.1% [4] - Internal revenue growth was reported at 3.1%, surpassing the four-analyst average estimate of 2.5% [4] - Growth from acquisitions was 4.3%, below the average estimate of 6.1% from three analysts [4] - Divestitures showed a change of -0.3%, compared to an average estimate of 0% [4] - Total average yield was 2.3%, higher than the three-analyst average estimate of 1.8% [4] Segment Performance - WM Healthcare Solutions reported net operating revenues of $615 million, slightly below the four-analyst average estimate of $615.55 million [4] - WM Renewable Energy achieved net operating revenues of $157 million, exceeding the average estimate of $149.45 million and representing a significant year-over-year increase of 68.8% [4] - Recycling Processing and Sales generated net operating revenues of $355 million, falling short of the average estimate of $360.11 million and reflecting a year-over-year decline of 10.8% [4] - Corporate and Other segments reported net operating revenues of $6 million, surpassing the average estimate of $5.18 million and showing a year-over-year increase of 20% [4] Stock Performance - Shares of Waste Management have returned +4.2% over the past month, outperforming the Zacks S&P 500 composite's +0.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Viewpoint - Waste Management reported quarterly earnings of $1.93 per share, missing the Zacks Consensus Estimate of $1.95 per share, representing an earnings surprise of -1.03% [1]. Financial Performance - The company posted revenues of $6.31 billion for the quarter ended December 2025, missing the Zacks Consensus Estimate by 1.21%, compared to year-ago revenues of $5.89 billion [2]. - Over the last four quarters, Waste Management has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2]. Stock Performance - Waste Management shares have increased by approximately 5.3% since the beginning of the year, outperforming the S&P 500's gain of 1.9% [3]. - The current consensus EPS estimate for the upcoming quarter is $1.79 on revenues of $6.31 billion, and for the current fiscal year, it is $8.27 on revenues of $26.59 billion [7]. Industry Outlook - The Waste Removal Services industry is currently ranked in the bottom 38% of over 250 Zacks industries, indicating potential challenges ahead [8]. - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Waste Management's stock performance [5].

Financial Performance - Total revenue for Q4 2025 was $6,313 million, representing a 7.1% increase year-over-year, while full-year revenue reached $25,204 million, up 14.2% from the previous year[5] - Operating revenues for Q4 2025 reached $6,313 million, a 7.1% increase from $5,893 million in Q4 2024[29] - Consolidated net income for the year ended December 31, 2025, was $2,709 million, slightly down from $2,745 million in 2024[33] - Basic earnings per share for Q4 2025 were $1.84, compared to $1.49 in Q4 2024, reflecting a 23.5% increase[29] - Operating revenues for the year ended December 31, 2025, were reported at $25,204 million, an increase from $22,063 million in 2024, representing a growth of approximately 9.7%[53] - Income from operations for 2025 was reported at $4,308 million, down from $4,063 million in 2024, indicating a decrease of approximately 6.0%[53] - The company reported a net income attributable to Waste Management, Inc. for the year ended December 31, 2025, was reported at $2,708 million, with a diluted earnings per share of $6.70[51] Cash Flow and Capital Expenditures - Free cash flow in 2025 was $2.94 billion, an increase of 26.8% compared to the prior year, with net cash provided by operating activities at $6.04 billion, up 12.1%[11] - Cash flows from operating activities for the year were $6,043 million, up from $5,390 million in 2024, indicating a 12.1% increase[33] - Capital expenditures for the year were $3,227 million, consistent with $3,231 million in 2024[33] - Projected free cash flow for 2026 is estimated to be between $3,750 million and $3,850 million, depending on different scenarios[61] EBITDA and Margins - Operating EBITDA for the total company grew 13.3% in 2025, with an adjusted operating EBITDA margin exceeding 30% for the first time, reaching 30.1% for the full year[4] - Adjusted operating EBITDA for the year ended December 31, 2025, was $7,582 million, with an adjusted operating EBITDA margin of 30.1%[51] - The adjusted operating EBITDA margin for the three months ended December 31, 2025, was 31.3%, up from 28.9% in the same period of 2024[45] - Adjusted operating EBITDA for 2026 is projected to be between $8,150 million and $8,250 million, indicating a growth of 6.2% on a comparable basis[13] Shareholder Returns - The company plans to return approximately $3.5 billion to shareholders in 2026 through dividends and share repurchases[2] Business Segments and Growth - The Healthcare Solutions business achieved an operating EBITDA margin of 13.5% in 2025, up from 1.0% in 2024, with further improvements expected in 2026[8] - The company invested approximately $400 million in acquisitions in 2025, focusing on solid waste and recycling businesses[11] - Acquisitions during the year resulted in gross annualized revenue of $2,622 million, with total consideration net of cash acquired amounting to $6,720 million[40] Sustainability and Future Projects - WM anticipates completing six additional renewable natural gas plants and four recycling projects in 2026 as part of its sustainability growth strategy[15] - The company anticipates capital spending of about $85 million in 2026 for renewable natural gas facilities and a new recycling growth project, expected to contribute to operating EBITDA by 2028[10] Pricing and Market Conditions - The company reported a blended average price for single-stream recycled commodities of approximately $62 per ton in the quarter, down from $87 per ton in the prior year period[7] - The average price for renewable natural gas sold in 2025 was about $31 per MMBtu, with expectations to generate between 21 and 22 million MMBtu of renewable natural gas in 2026[21] - The company has contracted 60% of its renewable natural gas at a blended average price of about $27 per MMBtu for 2026[21] - The 2026 financial outlook includes a blended average single-stream recycled commodity price of approximately $70 per ton, with a $10 per ton change impacting operating EBITDA by approximately $27 million[21] Debt and Liabilities - Long-term debt decreased to $22,196 million in 2025 from $22,541 million in 2024, a reduction of 1.5%[31] - The total liabilities decreased to $35,844 million in 2025 from $36,313 million in 2024, a decline of 1.3%[31] Operational Efficiency - Operating expenses as a percentage of revenue for the Legacy Business improved by 150 basis points in 2025, reflecting effective cost management strategies[7] - Operating expenses as a percentage of revenues for 2025 were 59.6%, a slight decrease from 60.7% in 2024[57] - Adjusted SG&A expenses for 2025 were $14,996 million, compared to $13,382 million in 2024, indicating an increase of approximately 12.1%[57] Conference Call - The company will host a conference call on January 29, 2026, to discuss the fourth quarter and full-year 2025 results[18]

Core Insights - WM reported strong financial results for the fourth quarter and full year 2025, achieving record performance in operating expenses as a percentage of revenue and the best full-year adjusted operating EBITDA margin [1][4][5] - The company anticipates nearly 30% growth in free cash flow for 2026, supported by its solid waste network and investments in recycling and renewable energy projects [3][12] - WM plans to return approximately $3.5 billion to shareholders in 2026 through dividends and share repurchases while targeting a leverage ratio between 2.5x and 3.0x [3][12] Financial Performance - Total revenue for Q4 2025 was $6,313 million, a 7.1% increase from Q4 2024, while full-year revenue reached $25,204 million, up 14.2% from the previous year [2][7] - Operating EBITDA for the total company grew 13.3% in 2025, with an adjusted growth of 15.5%, marking the first time the full-year adjusted margin exceeded 30% [5][6] - Net income for Q4 2025 was $742 million, with diluted EPS of $1.83, compared to $598 million and $1.48 in Q4 2024 [2][32] Business Segments - The Legacy Business saw an 8.0% increase in operating EBITDA in 2025, with a margin expansion of 90 basis points [5][6] - The Healthcare Solutions segment improved its operating EBITDA margin to 13.5% in 2025 from 1.0% in 2024, driven by integration and process improvements [5][6] - Revenue from the Healthcare Solutions segment for Q4 2025 was $615 million, reflecting significant growth compared to previous periods [7][37] Cost Management - Operating expenses as a percentage of revenue for the total company improved to 58.5% in Q4 2025, down from 59.5% in Q4 2024 [7][8] - SG&A expenses as a percentage of revenue for the total company improved to 10.7% in Q4 2025, reflecting strong cost management [8][9] - The company achieved a 150 basis point improvement in operating expenses as a percentage of revenue for the Legacy Business in 2025 [7][8] Cash Flow and Investments - WM generated $6.04 billion in net cash from operating activities in 2025, a 12.1% increase from the prior year, leading to free cash flow of $2.94 billion, up 26.8% [11][35] - The company invested approximately $400 million in acquisitions for solid waste and recycling businesses in 2025 [11][35] - For 2026, WM expects capital expenditures to support business growth to be between $2,450 million and $2,550 million [13][14] Sustainability and Growth Outlook - WM is progressing its sustainability growth portfolio, expecting to complete six additional renewable natural gas plants and four recycling projects in 2026 [14][15] - The company anticipates growth in its sustainability businesses, driven by contributions from growth projects, despite lower commodity prices [16][14] - The Healthcare Solutions business is projected to grow revenue by around 3% in 2026, primarily driven by price increases [16][14]