Waste Management(US:WM)2025-10-28 15:00Financial Data and Key Metrics Changes - The company reported a third-quarter operating EBITDA growth of over 15% and free cash flow growth of nearly 33% [6][10] - Total company operating EBITDA margin reached 30.6%, the best quarterly result in history, while the legacy business achieved a margin of 32% [18][19] - Free cash flow for the first nine months of 2025 grew 13.5% to $2.11 billion, with operating EBITDA to free cash flow conversion approaching 42% [20][21] Business Line Data and Key Metrics Changes - The collection and disposal business contributed more than half of the year-over-year increase in operating EBITDA, with MSW and special waste volumes growing by 5% and 5.5% respectively [6][12] - Operating EBITDA margins in the collection and disposal business expanded by 100 basis points to a record 38.4%, with every line of business contributing to growth [12][14] - The healthcare solutions segment's operating EBITDA margin improved to 17.5%, reflecting successful integration efforts [19][23] Market Data and Key Metrics Changes - The company experienced solid organic revenue growth driven by disciplined pricing and improving volume trends, with core price at 6% [13][14] - Landfill volumes rose by 5.2%, with broad strength across MSW, special waste, and construction and demolition [14][48] - Despite a nearly 35% decline in recycled commodity prices, the recycling segment's operating EBITDA grew by 18% [9][20] Company Strategy and Development Direction - The company is focused on maximizing customer lifetime value through pricing strategies and technology optimization [6][7] - Investments in technology and automation, as well as in new recycling and renewable natural gas facilities, are expected to yield benefits in 2026 [10][11] - The company remains disciplined in capital allocation, expecting to return significant value to shareholders through dividends and potential share repurchases [21][79] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term value of the healthcare solutions acquisition, despite a more measured revenue growth pace than initially projected [21][23] - The company anticipates a strong fourth quarter, driven by improved execution and a robust post-collection network [50][51] - Management highlighted the importance of customer-centric strategies and operational efficiencies in driving future growth [62][64] Other Important Information - The company has returned $1 billion to shareholders in dividends and allocated over $400 million to solid waste acquisitions [21] - The CFO announced retirement plans, expressing confidence in the incoming CFO and the company's future [24][25] Q&A Session Summary Question: How much have you benefited from one-time cleanup work at the landfill? - The company indicated that total revenues from wildfire volumes were around $115 million for the year, with a significant EBITDA growth in solid waste results without meaningful impacts from wildfires [29][30] Question: Can you clarify the charges this quarter? - The landfill impairment was due to a long-term pursuit of expansion that was deemed no longer viable, leading to recorded impairments [31][32] Question: What are the expectations for 2026 free cash flow? - The company expects free cash flow to approach $3.8 billion, driven by a wind-down of sustainability investments and strong performance from the legacy business [10][33] Question: How is the healthcare solutions business performing? - The healthcare solutions business is experiencing some churn but has renewed nearly $200 million worth of business, indicating strong customer retention and growth potential [81] Question: What is the outlook for M&A activity? - The company anticipates a normal M&A pipeline of $100 million to $200 million for 2026, with ongoing integration of the healthcare solutions business [77][79]