WM 10-K diff: FY 2024-12-31 → FY 2025-12-31
Paragraph-level diff of Risk Factors (Item 1A) and Management's Discussion & Analysis (Item 7).
Item 1A · Risk Factors
+83 paragraphs −115 paragraphs ~83 changed
FY 2024-12-31 (earlier)
Item 1A. Risk Factors.Our business, financial condition and results of operations are subject to numerous risks and uncertainties. You should carefully consider the following risk factors in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and our “Financial Statements and Supplementary Data” in Item 8. In addition to the following risks, there may be additional risks and uncertainties that adversely affect our business, performance, or financial condition in the future that are not presently known or are not currently believed to be material.
Strategy and Operational Risks
If we fail to implement our business strategy, our financial performance and our growth could be materially and adversely affected.
Our future financial performance and success are dependent in large part upon our ability to implement our business strategy successfully. Implementation of our strategy will require effective management of our operational, financial and human resources and will place significant demands on those resources. See Item 1. Business for more information on our business strategy. There are risks involved in pursuing our strategy, including the following:
● Our employees, customers or investors may not embrace and support our strategy.● We may not be able to hire or retain the personnel necessary to manage our strategy effectively.
● A key element of our strategy is yield management through focus on price leadership, which has presented challenges to keep existing business and win new business at reasonable returns. The loss of volumes as a result of price increases and our unwillingness to pursue lower margin volumes may negatively affect our cash flows or results of operations. Additionally, we have in the past and may in the future face purported class action lawsuits related to our customer service agreements, prices, surcharges and other mandated fees.● We may be unsuccessful in implementing our technology-led automation and optimization strategy and other improvements to operational efficiency and such efforts may not yield the intended result.● We may not be able to maintain cost savings achieved, including through our automation and optimization efforts, due to inflationary cost pressures or otherwise.
● Strategic decisions with respect to our asset portfolio may result in impairments to our assets.
● Execution of our strategy, including growth through acquisitions, such as our recent Stericycle acquisition, and our planned and ongoing expansion of our Recycling Processing and Sales and WM Renewable Energy segments, has caused, and may in the future, cause us to incur substantial additional indebtedness, which may divert capital away from our traditional business operations and other financial plans, and may introduce additional risks and volatility to our financial performance.● Our ability to make strategic acquisitions depends on our ability to identify desirable acquisition targets, negotiate advantageous transactions despite competition for such opportunities, fund such acquisitions on favorable terms, obtain regulatory approvals and realize the benefits we expect from those transactions.● Acquisitions, investments and/or new service offerings or lines of business may not increase our earnings in the timeframe anticipated, or at all, due to difficulties operating in new markets or providing new service offerings or lines of business, failure of technologies to perform as expected, failure to operate within budget, integration issues, or regulatory issues and compliance costs, among others, and we may experience issues successfully integrating acquisitions into our internal controls, operations, and/or accounting systems.
● Integration of acquisitions and/or new services offerings or lines of business, such as our expansion into medical waste, controlled substances waste and secure information destruction services, and additional expansion into markets outside of North America has and would result in our business being subject to new laws and regulatory regimes, resulting in greater exposure to risk of inadvertent noncompliance and additional compliance costs.● Liabilities associated with acquisitions, including ones that may exist only because of past operations of an acquired business, may prove to be more difficult or costly to address than anticipated, and businesses or assets we acquire may have undisclosed liabilities, despite our efforts to minimize exposure to such risks through due diligence and other measures.25
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● Supply chain, regulatory or permitting disruptions or delays could detrimentally impact the execution timeline for our planned and ongoing expansions of our Recycling Processing and Sales and WM Renewable Energy businesses.
● We continue to seek to divest underperforming and non-strategic assets and operations if we cannot improve their profitability. We may not be able to successfully divest underperforming and non-strategic assets and operations, which could result in asset impairments or the continued operation of low-margin businesses.
In addition to the risks set forth above, implementation of our business strategy could be affected by other factors beyond our control, such as increased competition, legal developments, government regulation, global geopolitical instability, general economic conditions, including slower growth or recession, increased operating costs or expenses, inflation, subcontractor costs and availability and changes in industry trends. We may decide to alter or discontinue certain aspects of our business strategy at any time. Even if we are able to implement some or all of the initiatives of our business strategy successfully, our operating results may not improve to the extent we anticipate, or at all.
We may not realize the strategic benefits and cost synergies anticipated from the Stericycle acquisition.
The benefits we expect to receive from the acquisition of Stericycle depend on the performance of the Stericycle business and its ability to achieve financial and operational targets and strategic goals. The acquired Stericycle business, which is now presented as our new WM Healthcare Solutions segment, is subject to numerous risks and uncertainties that could cause performance to be materially different than we anticipate; such factors include, but are not limited to, decreases in the volume of medical waste and controlled substances wastes or personal and confidential information collected from customers; disruptions resulting from deployment of systems, including with respect to the implementation of Stericycle’s enterprise resource planning system and billing and collection delays that Stericycle has experienced following the launch of such system upgrade; changing market conditions in the healthcare industry; competition and demand for services for the medical waste, controlled substances waste and secure information destruction industries; commodity price volatility; changes in regulation of the collection, transportation, treatment and disposal or destruction of medical waste and controlled substances waste or the proper handling and protection of personal and confidential information; the level of government enforcement of regulations governing medical waste and controlled substances waste collection and treatment or the proper handling and protection of personal and confidential information; and the outcome of pending, future or settled litigation or investigations. Should the Stericycle business be unsuccessful in achieving financial and operational targets and implementing the WM Healthcare Solutions business strategy, it could negatively impact our realization of benefits from the acquisition, as well as our stock price and our future business and financial results.
The benefits that are expected to result from our acquisition of Stericycle also depend, in part, on our ability to realize anticipated cost synergies. Our success in realizing these benefits and cost synergies, and the timing of this realization, depends on the successful integration of the Stericycle business. There is a significant degree of difficulty and management attention inherent in the process of integrating an acquisition of this size. The process of integrating operations could cause business interruption and distraction. Some members of our management may be required to devote considerable time to this integration process, which will decrease the time they will have to manage our Company, service existing customers, attract new customers and develop new products or strategies. If management is not able to effectively manage the integration process, including retention of key Stericycle personnel, or if any significant business activities are interrupted as a result of the integration process, our business, financial condition and results of operations could suffer. The acquisition of Stericycle may not result in realization of the benefits and cost synergies that we currently expect, and we cannot guarantee that these benefits and cost synergies will be achieved within anticipated time frames or at all. Additionally, we may incur substantial expenses in connection with the integration of the Stericycle business, which may exceed expectations and offset certain benefits.Our operations must comply with extensive existing regulations, and changes in regulations, including with respect to emerging contaminants and extended producer responsibility, can restrict or alter our operations, increase our operating costs, increase our tax liabilities, reduce revenues, or require us to make additional capital expenditures.Stringent government regulations at the federal, state, provincial and local level in the U.S. and Canada, as well as other international jurisdictions where we operate, have a substantial impact on our operations, and compliance with such regulations is costly. See Item 1. Business – Regulation for additional information. Many complex laws, rules, orders and interpretations govern environmental protection, health, safety, land use, zoning, transportation, ethical business conduct,
26Table of Contentsdata privacy and security, and other related and similar subjects. Among other things, governmental regulations and enforcement actions restrict our operations at times and may adversely affect our financial condition, results of operations and cash flows by imposing conditions such as:
● limitations on siting and constructing new waste disposal, destruction, transfer, recycling or processing facilities or on expanding existing facilities;
● limitations, regulations or levies on collection and disposal prices, rates and volumes;
● limitations, bans, taxes or charges on the disposal, destruction or transportation of out-of-state waste or certain categories of waste;
● mandates regarding the management of solid waste, organics, medical waste, controlled substances waste and other materials, including requirements to recycle, divert, destroy, or otherwise process certain waste, recycling and other streams; or
● limitations or restrictions on the recycling, processing or transformation of waste, recycling and other streams.
Regulations affecting the siting, design and closure of landfills require us, at times, to undertake investigatory or remedial activities, curtail operations or close landfills temporarily or permanently. We have significant financial obligations relating to final capping, closure, post-closure and environmental remediation at our existing landfills and we establish accruals for these estimated costs. Expenditures could be accelerated or materially exceed our accruals due to earlier than expected closure of landfills; the types of waste collected and manner in which it is transported and disposed of, including actions taken in the past by companies we have acquired or third-party landfill operators; environmental regulatory changes; new information about waste types previously collected, or other emerging contaminants. Similar issues can also result in a significant increase in operating costs; for example, developments in recent years related to management of per-and polyfluoroalkyl substances (“PFAS”) have increased our landfill operating costs. Federal and state governments have increased their focus on efforts to safeguard communities from the potentially harmful effects associated with PFAS. See Item 1. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation – PFAS for additional information. We may face increased exposure to testing, remediation and litigation costs as a result of new and emerging PFAS regulations and requirements.
Regulations establishing extended producer responsibility (“EPR”) are being considered or implemented in many places around the world, including in certain states in the U.S. and provinces in Canada. EPR regulations are designed to place either partial or total responsibility on producers of consumer-packaged goods and other products to fund the post-use life cycle of the products and packaging they create. For additional information, See Item 1. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation – Extended Producer Responsibility . A significant reduction in the waste, recycling and other streams we manage, including with respect to quality and volume, could have a material adverse effect on our financial condition, results of operations and cash flows.
Following our acquisition of Stericycle, we are subject to additional laws and regulations in the U.S. and internationally concerning transportation, management and disposal or destruction of medical waste streams, including regulations that govern the definition, generation, segregation, handling, packaging, transportation, treatment, storage and disposal or destruction of medical waste and controlled substances waste, along with extensive recordkeeping and documentation requirements. Additionally, Stericycle’s secure information destruction services are subject to additional laws and regulations regarding proper handling and protection of personal and confidential information. Relaxation of enforcement, government shutdowns, or other changes in governmental regulation of medical waste and controlled substances waste and personal and confidential information could increase the number of competitors we face or reduce or delay the need for these services.
Stericycle is, and has been, involved in government investigations, enforcement proceedings, private lawsuits and other disputes alleging noncompliance with applicable regulations, including alleged noncompliance with the Controlled Substances Act and other statutes involving its now-divested Domestic Environmental Solutions business of collecting, transporting, and destroying controlled substances from retail customers. With the acquisition of Stericycle, these matters may result in adverse consequences, including permit revocations or denials and civil, criminal and administrative penalties.
The new U.S. presidential administration has called for substantial changes to areas of foreign trade policy and has generally appeared to be in favor of reducing regulation, including environmental regulation. We do not know what impact the change in U.S. presidential administration will have on specific regulatory policies impacting our industry and our Company, especially given the number of rules currently in litigation, nor can we predict the timing of any such changes.
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Reduction of regulation may have a favorable impact on our operating costs, but the extensive environmental regulation applicable to our industry is also a barrier to rapid entry that benefits our Company. Significant new restrictions and tariffs on foreign trade could have a negative impact on our recycling export business and our cross-border commerce, particularly with Canada, and could increase the cost of certain equipment and other materials used in our operations that we procure from outside the U.S., including our trucks and certain equipment used to implement our sustainability growth strategy. It is likely that some policies adopted by the new administration will benefit us and others will negatively affect us.If we encounter regulatory compliance issues in the course of operating our business, we may experience adverse publicity, which may intensify if such noncompliance results in legal liability. Any legal liability or adverse publicity from such noncompliance may harm our reputation and result in difficulties in attracting new customers, or retaining existing customers, which would negatively impact our results of operations and financial condition.
Our business is subject to operational and safety risks, including the risk of injury to employees and others.Providing environmental and waste management services, including constructing and operating landfills, transfer stations, processing facilities, recycling facilities and other disposal or destruction facilities, and landfill gas-to-energy facilities, involves risks such as truck accidents, equipment defects, malfunctions and failures, and improper use of dangerous equipment. Additionally, we closely monitor and manage landfills to minimize the risk of waste mass instability, releases of hazardous materials, and odors that are sometimes triggered by weather or natural disasters. There are also risks presented by the potential for subsurface heat reactions causing elevated landfill temperatures and increased production of leachate, landfill gas and odors, and we have proactively incurred increased costs to manage leachate in response to this risk. We build and operate natural gas fueling stations, some of which also serve the public or third parties. Operation of fueling stations and landfill gas collection and control systems, as well as operation of heavy machinery and management of flammable materials at our recycling facilities and transfer stations, involves additional risks of fire and explosion. The Stericycle business requires handling of medical waste and controlled substances waste. Incidents such as truck accidents, damaged or leaking containers, improper storage of medical waste and controlled substances waste, placement of prohibited materials into the waste stream, or malfunctioning plant equipment could result in exposure to contaminated or infectious waste or other hazardous materials.
Any of these risks could potentially result in injury, illness or death of employees and others. These risks could also result in a need to shut down or reduce operation of facilities, increased operating costs and exposure to liability for pollution, public nuisance, and other environmental damage, and property damage or destruction. While we seek to minimize our exposure to such risks through comprehensive training, compliance and response and recovery programs, as well as vehicle and equipment maintenance programs, if we were to incur substantial liabilities in excess of any applicable insurance, our business, results of operations and financial condition could be adversely affected. Any such incidents could also tarnish our reputation and reduce the value of our brand. Additionally, a major operational failure, even if suffered by a competitor, may bring enhanced scrutiny and regulation of our industry, with a corresponding increase in operating expense.We may be unable to obtain or maintain required permits for our operations or expand existing permitted capacity at our landfills, due to land scarcity, public opposition or otherwise, which can require us to identify disposal alternatives, resulting in decreased revenue and increased costs.Our ability to meet our financial and operating objectives depends in part on our ability to obtain and maintain the permits, authorizations, approvals, certificates, and other governmental permissions necessary to operate landfill sites, recycling facilities, compost facilities, processing facilities, landfill gas-to-energy facilities, incineration facilities and transfer stations in the various jurisdictions in which we operate. Changes in applicable laws and regulations could require us to obtain new permits or to change the way in which we operate our business. Even where permits are obtained, they may contain conditions or restrictions that limit our ability to operate efficiently. Permits to build, operate and expand solid waste management facilities, including landfills and transfer stations, have become more difficult and expensive to obtain and maintain. Permits often take years to obtain as a result of numerous hearings and compliance requirements with regard to zoning, environmental and other regulations. These permits are also often subject to resistance from citizen or other groups and other political pressures. Local communities and citizen groups, adjacent landowners or governmental agencies may oppose the issuance of a permit or approval we may need, allege violations of the permits under which we currently operate or laws or regulations to which we are subjected, or seek to impose liability on us for alleged environmental damage. Such actions could also impact our ability to do business by causing reputational harm. Our ability
28Table of Contentsto receive permits is also impacted by land scarcity, particularly in densely populated areas. Diminishing disposal capacity, typically in proximity to major metropolitan areas, sometimes requires us to transport waste by rail or find alternative disposal solutions in affected areas, increasing our operating costs. Governments are increasingly adopting requirements for environmental justice reviews as part of certain permitting decisions. These policies generally require permitting agencies to give heightened attention to the potential for projects to disproportionately impact low-income and minority communities. Responding to permit challenges has, at times, increased our costs and extended the time associated with establishing new facilities and expanding existing facilities. Our failure to obtain the required permits and necessary capacity expansion to operate our business, including our landfills, could have a material adverse impact on our financial condition, results of operations and cash flows.
If we are unable to attract, hire or retain key team members and a high-quality workforce, or if our succession planning does not develop an adequate pipeline of future leaders, it could disrupt our business, jeopardize our strategic priorities and result in increased costs, negatively impacting our results of operations.
Our operations require us to attract, hire, develop and retain a high-quality workforce to provide a superior customer experience. This includes key individuals in leadership and specialty roles, as well as a very large number of drivers, technicians and other front-line and back-office team members necessary to provide our environmental services. We experience significant competition to hire and retain individuals for certain front-line positions, such as commercial truck drivers, from within and outside our industry. (Also see Item 1A. Risk Factors — Market disruption, including labor shortages, external strikes, and supply chain constraints, and macroeconomic pressures, including inflation, have recently had, and may in the future have, an adverse impact on our business and results of operations.) Additionally, the market for employees that serve on our digital team is highly competitive. As we have accelerated our investments in our technology-led automation and optimization strategy, it is increasingly important that we are able to attract and retain employees with the skills and expertise necessary to implement and manage these projects. We also compete to attract skilled business leaders, and our own key team members are sought after by our competitors and other companies. We make significant investments, and engage in internal succession planning, to provide us with a robust pipeline of future leaders. If we are not able to attract, hire, develop and retain a high-quality workforce with the necessary skills and expertise, as well as key leaders, or if we experience significant employee turnover, it can result in business and strategic disruption, increased costs, and loss of institutional knowledge, which could negatively impact our results of operations.
Increases in our labor costs as a result of labor unions organizing, changes in regulations related to labor unions or increases in employee minimum wages, could adversely affect our future results.
Labor unions continually attempt to organize our employees, and these efforts will likely continue in the future. Certain groups of our employees are currently represented by unions, and we have negotiated collective bargaining agreements with these unions. Additional groups of employees may seek union representation in the future, and, if successful, would enhance organized labor’s leverage to obtain higher than expected wage and benefits costs and resist the introduction of new technology and other initiatives, which can result in increased operating expenses and lower net income. If we are unable to negotiate acceptable collective bargaining agreements, our operating expenses could increase significantly as a result of work stoppages, including strikes. Additionally, a large portion of our workforce are hourly personnel, and many of these individuals, particularly in our recycling business, are paid at rates related to federal and state minimum wages. Increases in minimum wage rates, or the enactment of new wage-related legislation, may significantly increase our labor costs. Any of these matters could adversely affect our financial condition, results of operations and cash flows.The seasonal nature of our business, severe weather events resulting from climate change and event driven projects cause our results to fluctuate, and prior performance may not be indicative of our future results.Our financial and operating results may fluctuate for many reasons. Our operating revenues and volumes typically experience seasonal increases in the summer months, that are reflected in second and third quarter revenues and results of operations. Service or operational disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly affect the operating results of the geographic areas affected. Extreme weather events may also lead to supply chain disruption and delayed project development, or disruption of our customers’ businesses, reducing the amount of waste generated by their operations. Conversely, certain destructive weather and climate conditions, such as wildfires in the Western U.S. and hurricanes that most often impact our operations in the Southern and Eastern U.S. during the second half of the year, can increase our revenues in the geographic areas affected as a result of the waste volumes generated by these events. While weather-related and other event-driven projects can boost revenues through additional
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work for a limited time, due to significant start-up costs and other factors, such revenue can generate earnings at comparatively lower margins. For these and other reasons, operating results in any period may not be indicative of operating results for any other period. Our stock price may be negatively impacted by interim variations in our results.
Damage to our reputation and the value of our brand would negatively impact our business.
We believe we have developed a reputation for high-quality service, reliability and social and environmental responsibility, and we believe our brand symbolizes these attributes. The WM brand name, trademarks and logos and our reputation are powerful sales and marketing tools, and we devote significant resources to promoting and protecting them. Adverse publicity, whether or not justified, relating to activities by our operations, employees or agents, or challenges to our assertions of social and environmental responsibility, could tarnish our reputation and reduce the value of our brand. (Also see Item 1A. Risk Factors — Focus on, and regulation of, sustainability performance and disclosure can result in increased costs, risk of noncompliance, damage to our reputation and related adverse effects).We have made significant investments in an extensive natural gas truck fleet, which makes us partially dependent on the availability of natural gas and fueling infrastructure and vulnerable to natural gas prices, and requirements to transition away from our current vehicle fleet to electric powered vehicles could impair our investments and result in cost increases and significant additional capital investment.
We operate a large fleet of natural gas vehicles, and we plan to continue to invest in these assets for our collection fleet. However, natural gas fueling infrastructure is not yet broadly available in the U.S. and Canada; as a result, we have constructed and operate natural gas fueling stations, some of which also serve the public or pre-approved third parties. It will remain necessary for us to invest capital in fueling infrastructure to power our natural gas fleet. Fluctuations in the price and supply of natural gas or diesel fuel could substantially increase our operating expenses; a reduction in the existing cost differential between natural gas and diesel fuel could materially reduce the benefits we anticipate from our investment in natural gas vehicles.There is increasing pressure to reduce the use of fossil fuel in the heavy-duty truck industry, and some regulatory bodies are pursuing requirements for using alternative engine technology, such as electric powered vehicles, rather than natural gas or diesel vehicles. This is resulting in regulatory actions to advance the adoption of zero-emission vehicles and a shift away from tax incentives and grants for natural gas trucks and RNG infrastructure. See Item 1. Business – Regulation – Investment in Natural Gas Vehicles and Infrastructure for additional information. Regulation mandating an accelerated transition away from natural gas trucks and our remaining diesel vehicles, including the recently acquired Stericycle fleet, to electric powered vehicles would increase our cost to acquire vehicles needed to service our customers, and capital investment required to establish sufficient charging infrastructure could be significant. Additionally, the investments we have made in an industry-leading natural gas fleet and infrastructure could be impaired. Tax incentives and grants that advance the adoption of zero-emissions vehicles and lead to a shift away from natural gas trucks and RNG infrastructure would likely also negatively impact our investments in landfill gas-to-energy facilities.
We may not be able to achieve our sustainability-related goals, including reduction of our greenhouse gas ("GHG") emissions, or execute on our sustainability-related growth strategy and initiatives, within planned timelines or anticipated budget, which could damage our reputation and negatively impact the benefits anticipated from our investments.
Consistent with our Company’s long-standing commitment to sustainability and environmental stewardship, we have set goals to reduce our GHG emissions and announced other sustainability-related goals and initiatives. We may not be able to meet such goals or implement such initiatives in the manner or on timelines contemplated due to challenges including, but not limited to, unforeseen costs or delays, changes in how GHG emissions are calculated or otherwise reported, supply chain disruptions, regulatory impacts, integration of acquired assets or businesses, technology limitations or technical difficulties associated with achieving such goals. Changes to our business or asset base that were not contemplated when we set our sustainability-related goals, including the acquisition and integration of Stericycle’s business, assets and operations, could adversely impact our progress towards these goals and require us to adjust them. These changes could negatively impact public perception of our Company and stakeholders may view these changes unfavorably. Also, despite voluntarily announcing such sustainability goals, we may receive pressure from investors or other groups to adopt more aggressive sustainability-related goals that may not be technically, operationally, or financially feasible.
30Table of ContentsIn addition, our sustainability-related growth strategy includes significant planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments. Our ability to successfully execute this strategy may be impacted by the numerous risks and uncertainties associated with our business and the environmental services industry, including financial and operating performance, availability of technology and financing, changes in regulation, commodity price fluctuation and general economic conditions. (Also see Item 1A. Risk Factors — Our revenues, earnings and cash flows fluctuate based on changes in commodity prices and demand and may fluctuate substantially without notice in the future and — Our sustainability growth strategy includes significant planned and ongoing investments in our WM Renewable Energy segment; changes to federal and state renewable fuel policies could affect our financial performance, and such investments may not yield the results anticipated. ) Favorable expectations regarding potential investment tax credits or other benefits stemming from the Inflation Reduction Act of 2022 (“IRA”) may not materialize or could fail to meet expectations. See Item 1. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation – Tax Legislation for additional information.
Some or all of the expected benefits of our sustainability-related investments and initiatives may not occur within the anticipated time periods or may cost more to achieve than anticipated. An inability to develop, obtain, or scale necessary equipment, technology and innovations, and challenges arising from the availability or cost of materials and infrastructure or regulatory approvals or permitting requirements associated with our sustainability investments and initiatives, could impede our ability to execute on our plans and achieve our goals or realize our expected financial performance from these investments. Actions we take to achieve these goals and implement our sustainability growth strategy and initiatives, including development and implementation of enhanced technology and reporting systems, will require increased capital expenditures and management focus, which may divert investment and management focus away from other aspects of our business operations.
We have also forecasted or projected certain operational and financial information with respect to our sustainability investments and initiatives, and many of these statements are based on expectations and assumptions that are necessarily uncertain and are subject to risks and uncertainties that could cause actual results to be materially different from our forecasts and projections. For example, the amount of gas produced over time at landfills can vary depending on many factors, including weather and the composition of the inbound waste stream. While we have sophisticated systems to predict gas curves, they are inherently uncertain, and if we have less gas than predicted at a site where we have invested in RNG infrastructure, it may take longer to achieve our return on investment. Relatedly, the quality of the gathered gas is subject to the composition of the waste deposited at our landfills, and the prevalence of certain chemical compounds may adversely affect the usability of such gas and require further investment in the treatment and management of such compounds. Regulations requiring diversion of organic wastes away from landfills could have the effect of decreasing the amount of landfill gas produced over time in our landfills.Focus on, and regulation of, sustainability performance and disclosure can result in increased costs, risk of noncompliance, damage to our reputation and related adverse effects.The nature, scope, and complexity of matters that our Company must assess, quantify and disclose are expanding due to current, proposed, and recently enacted governmental reporting requirements pertaining to sustainability and climate-related risks and other topics, such as water usage, waste production, labor, human capital, environmental justice, cybersecurity, privacy, and risk oversight. For example, see Item 1. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation – Climate and Sustainability for information about California’s Climate Corporate Data Accountability Act and Climate-Related Financial Risk Act, the SEC’s climate-related disclosure rule, which is currently stayed pending judicial review, as well as potential international reporting obligations, including the Corporate Sustainability Reporting Directive. Methodology and timelines for mandatory reporting requirements may be inconsistent with requirements enacted by other governmental entities, including with respect to measuring emissions and requiring a determination of “materiality” that may differ from traditional disclosure requirements under U.S. federal securities laws. Such inconsistency could further increase costs and divert management time and attention.
Our industry faces challenges to implement these rapidly developing disclosure requirements, as well as the risk of enforcement actions by governmental and regulatory agencies for noncompliance. Significant expenditures and commitment of time by management, employees and consultants is involved in developing, implementing and overseeing policies, practices, additional disclosures and internal controls related to environmental and sustainability risk and performance. Public statements with respect to sustainability matters are becoming increasingly subject to heightened scrutiny from public and governmental authorities related to the risk of potential “greenwashing,” i.e. , misleading information or false claims overstating potential sustainability benefits. We are aware that non-governmental organizations and other private actors have filed lawsuits against companies under various securities and consumer protection laws
31Table of Contentsalleging that certain sustainability-related statements, goals or standards were misleading, false or otherwise deceptive. An inability to implement such policies, practices, and internal controls and maintain compliance with laws and regulations, or a perception among stakeholders that our sustainability disclosures and goals are insufficient or our goals are unattainable, could harm our reputation and competitive position and negatively impact our stock price and business performance.
External Economic and Industry RisksMarket disruption, including labor shortages, external strikes, and supply chain constraints, and macroeconomic pressures, including inflation, have recently had, and may in the future have, an adverse impact on our business and results of operations.
Market disruption resulting from labor shortages, external labor disputes and strikes (such as the recent port strike) and supply chain and transportation constraints, and macroeconomic pressures, including inflation and rising interest rates, have recently had, and may in the future have, an adverse impact our results and can create risk and uncertainty in financial outlook. Inflation can and has increased costs for the goods and services we purchase, particularly for labor, repair and maintenance, and subcontractor costs. Supply chain activity has largely normalized, but disruption can reduce availability of certain assets used in our business. Aspects of our business rely on third-party transportation providers, and such services have become more limited and expensive. We may also experience margin pressures from commodity-driven business impacts. The October 2024 port strike negatively impacted recycling commodity prices, and the risk of another port strike, or global economic slowdown, could impact future prices. The constrained labor market has resulted in increased costs for wage adjustments, overtime hours and training new hires. If we are not able to overcome limitations on labor availability, it could materially impact our ability to service our customers and our financial results. Significant new restrictions and tariffs on foreign trade could have a negative impact on our recycling export business and our cross-border commerce, particularly with Canada, and could increase the cost of certain equipment and other materials used in our operations that we procure from outside the U.S., including our trucks and certain equipment used to implement our sustainability growth strategy. Geopolitical conflicts and the resulting international responses may also exacerbate market disruption, leading to volatility in commodity prices, impacts on the availability and cost of energy, increased cyberattacks, and vendor and supplier disruptions across the global supply chain. The extent and duration of the impact of these labor market, supply chain, transportation and commodity-price challenges are subject to numerous external factors beyond our control. If such impacts are prolonged and substantial, they could have a material negative effect on our results of operations.
Accelerated and pronounced economic pressures, such as rising interest rates and inflationary cost pressures, have impacted and continue to impact our cost structure and capital expenditures. Significant components of our operating expenses vary directly as we experience changes in revenue due to volume and inflation, and we may not be able to dynamically manage our cost structure in response to such changes. A significant portion of our revenue is tied to a price escalation index with a lookback provision, resulting in a timing lag in our ability to recover increased costs under those contracts during periods of rapid inflation. Separately, for many of our customers we provide services under multi-year contracts that can restrict our ability to increase prices and the timing of such increases. Our overall strategic pricing efforts are focused on recovering as much of the inflationary cost increases we experience in our business as possible by increasing our average unit rate, but such efforts may not be successful for various reasons including the pace of inflation, operating cost inefficiencies, contractual limitations, and market responses. The inability to adequately increase prices to offset increased costs and inflationary pressures, or otherwise mitigate the impact of these conditions on our business, will increase our costs of doing business and reduce our margins.The environmental services industry is highly competitive, and if we cannot successfully compete in the marketplace, our business, financial condition and operating results may be materially adversely affected.We encounter intense competition from governmental, quasi-governmental and private sources in all aspects of our operations and when expanding to new lines of business or new markets. We principally compete with large national waste management companies, counties and municipalities that maintain their own waste collection and disposal or recycling 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. In recent years, the industry has seen some additional consolidation, though the industry remains intensely competitive. Counties and municipalities may have financial competitive advantages because tax revenues are available to them and tax-exempt financing is more readily available to
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them. Also, such governmental units may attempt to impose flow control or other restrictions that would give them a competitive advantage. In addition, some of our competitors may have lower financial expectations, allowing them to reduce their prices to expand sales volume or to win competitively-bid contracts, including large national accounts and exclusive franchise arrangements with municipalities. When this happens, we may lose customers and be unable to execute our pricing strategy, resulting in a negative impact to our revenue growth from yield on base business.Our revenues, earnings and cash flows fluctuate based on changes in commodity prices and demand and may fluctuate substantially without notice in the future.Prices and demand for recyclables fluctuate and are particularly susceptible to volatility based on macroeconomic conditions and regulations. The fluctuations in the market prices or demand for these commodities can affect our operating income and cash flows positively, as we experienced in 2024, or negatively, as we experienced in 2023. The increase in market prices in 2024 for recyclable commodities resulted in a year-over-year increase in revenue of $245 million, and the decline in market prices in 2023 for recyclable commodities resulted in a year-over-year decrease in revenue of $308 million.
Regulations affecting, and in some cases restricting, the international flow of certain recyclables have led to a reduction in export activity for such recyclables, as well as higher quality requirements and higher processing costs. Additionally, the new U.S. presidential administration has called for substantial changes to foreign trade policy. Significant new restrictions and tariffs on foreign trade could negatively impact commodity prices and our recycling export business. We are making significant planned and ongoing investments in our recycling business to increase automation and reduce labor dependency and address increases in regulatory- and customer-driven quality requirements for commodities. These investments increase our exposure to commodity price fluctuations. Future regulation, tariffs, international trade policies or other initiatives, including regulations addressing climate change or GHG emissions, may impact supply and demand of material, or increase operating costs, which could impact the profitability of our recycling operations. If we do not effectively manage changes in demand and commodity prices for recyclable materials, or if we do not successfully execute our sustainability growth strategy, our investments in recycling infrastructure and technology may not yield the results anticipated.
Fluctuation in energy-related prices also affects our business, including recycling of plastics manufactured from petroleum products. Our sustainability growth strategy includes increased investment in landfill gas-to-energy facilities and expansion of our WM Renewable Energy segment, which generates and sells credits referred to as Renewable Identification Numbers (“RINs”). RINs prices generally respond to regulations enacted by the EPA, as well as fluctuations in supply and demand, and have historically been very volatile. Additionally, significant variations in the price of biogas, electricity and other energy-related products that are marketed and sold by our landfill gas recovery operations can result in a corresponding impact to our revenue from yield from such operations. Expansion of our WM Renewable Energy segment may introduce additional risks and volatility to our financial performance.
Increasing customer preference for alternatives to landfill disposal and bans on certain types of waste could reduce our landfill volumes and cause our revenues and operating results to decline.
Our customers are increasingly diverting waste to alternatives to landfill disposal, such as recycling and composting, while also working to reduce the amount of waste they generate. In addition, many state and local governments mandate diversion, recycling and waste reduction at the source and prohibit the disposal of certain types of materials at landfills, such as recyclables (cardboard, bottles and cans), yard waste, food waste and electronics. Where organic waste is not banned from disposal in landfills, some large customers such as grocery stores and restaurants are choosing to divert their organic waste from landfills. Zero-waste goals (sending no waste to the landfill) have been set by many large North American and global companies and government agencies. This increased focus on minimizing climate impacts may require the Company to invest in higher-cost technologies for more efficient waste collection and processing. Although such mandates and initiatives help to protect our environment, these developments reduce the volume of waste going to our landfills, which may affect the prices that we can charge for landfill disposal. Our landfills currently provide our highest income from operations margins. Reducing landfilled organic waste also reduces the amount of landfill gas produced from our landfills, adversely impacting our landfill gas-to-energy facilities. If we are not successful in expanding our service offerings, growing lines of businesses to service waste streams that do not go to landfills, and providing alternative services for customers that wish to reduce waste entirely, then our revenues and operating results may decline. Additionally, despite the development of new service offerings and lines of business, it is possible that our revenues and our income from operations margins could be negatively affected due to disposal alternatives.
33Table of ContentsWith a heightened awareness of the global problems caused by plastic waste in the environment, and actual or perceived risks for human health, many governments have passed ordinances banning certain types of plastics from sale or use. The most common materials banned include plastic bags and straws, polystyrene plastic and some types of single use packaging. These bans have increased pressure by manufacturers on our recycling facilities to accept a broader array of materials in curbside recycling and composting programs to alleviate public pressures to ban the sale of those materials. However, there are currently no or limited viable end markets for recycling many of these materials, and inclusion of such materials in our recycling stream increases contamination and operating costs that can negatively affect the results of our recycling operations.General economic conditions can directly and adversely affect revenues for our services and our income from operations margins.
Our business is directly affected by changes in national and general economic factors that are outside of our control, including consumer confidence, inflation, interest rates and access to capital markets. A weak economy generally results in decreased consumer spending and decreases in volumes of waste generated, which negatively impacts the ability to grow through new business or service upgrades, and may result in customer turnover and reduction in customers’ waste service needs. Consumer uncertainty and the loss of consumer confidence may also reduce the number and variety of services requested by customers. Additionally, a weak market for consumer goods can significantly decrease demand by paper mills for recycled corrugated cardboard used in packaging, which could negatively impact commodity prices and our operating income and cash flows.A decrease in waste volumes generated results in an increase in competitive pricing pressure; such economic conditions may also interfere with our ability to implement our pricing strategy. Many of our contracts have price adjustment provisions that are tied to an index such as the Consumer Price Index. Our costs may increase more than the increase, if any, in the Consumer Price Index, partially due to our relatively high fixed-cost structure. We may not be able to dynamically manage our cost structure in response to shifting volume levels and vendor costs, and our cost structure may not correlate with the Consumer Price Index or the waste industry. An economic recession or other economic weakness is likely to negatively impact our revenues and margins.Reduction in volumes of medical waste, controlled substances wastes, and personal and confidential information, and changing conditions in the healthcare industry, could adversely affect our financial results.
Following our acquisition of Stericycle, we provide compliance-based services that rely on the generation of medical waste, controlled substances waste and personal and confidential information by our customers. The volume of such material may be impacted by macroeconomic trends associated with manufacturing and industrial markets, healthcare market dynamics, and trends associated with an increase in work-from-home arrangements and electronic and digital record keeping. Long-term trends resulting from these factors could reduce the demand for these services.In addition, in the U.S. and elsewhere, the healthcare industry is evolving to meet competing demands for increased healthcare coverage of a growing and aging population and economic pressures to reduce healthcare costs. As a result of these dynamics, hospital networks are consolidating physician practices into their networks, independent practices are consolidating, and healthcare providers are focused on cutting costs within their businesses. These changes and consolidation of the customer base increase the competitive nature of the healthcare waste industry and exert downward pricing pressure, which could adversely affect our financial results.Weakness in the economy may expose us to credit risk of governmental entities and municipalities and other major customers, which could negatively impact our financial results.
We provide service to a number of governmental entities, municipalities, and large national accounts. During periods of economic weakness, governmental entities and municipalities can suffer significant financial difficulties, due in part to reduced tax revenue and/or high-cost structures. During these periods, such entities, and our non-governmental customers, could be unable to pay amounts owed to us or renew contracts with us at previous or increased rates.
Purchasers of our recycling commodities can be particularly vulnerable to financial difficulties in times of commodity price volatility. The inability of our customers to pay us in a timely manner or to pay increased rates, particularly large national accounts, could negatively affect our operating results.
In addition, the financial difficulties of municipalities could result in a decline in investors’ demand for municipal bonds and a correlating increase in interest rates. As of December 31, 2024, we had $1.4 billion of tax-exempt bonds with
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term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities. If market dynamics resulted in repricing of our tax-exempt bonds at significantly higher interest rates, we would incur increased interest expenses that may negatively affect our operating results and cash flows.Changes to applicable tax laws and regulation or interpretation thereof or the imposition of new or increased taxes may increase our tax liabilities and could adversely affect our operating results and cash flows .
We are subject to various complex and evolving U.S. federal, state, local and non-U.S. tax laws. Existing tax laws, policies, statutes, rules, regulations or ordinances, including those related to any non-U.S. tax jurisdictions in which we operate, could be interpreted, changed, modified or applied adversely to us, in each case, possibly with retroactive effect. Any significant variance in our interpretation of current tax laws or a successful challenge of one or more of our tax positions by the U.S. Internal Revenue Service or other tax authorities could increase our future tax liabilities and adversely affect our operating results and cash flows.
Shortages in diesel fuel supply or increases in diesel fuel prices will increase our operating expenses.The price and supply of diesel fuel can fluctuate significantly based on international, political and economic circumstances, as well as other factors outside our control, such as actions by oil and gas producers, regional production patterns, weather conditions and environmental concerns. We need diesel fuel to run a notable portion of our collection and transfer trucks and our equipment used in our landfill operations. We also recently acquired Stericycle’s fleet, including a substantial number of diesel vehicles. Fuel supply shortages and price increases could substantially increase our operating expenses. Regardless of any offsetting surcharge programs, increased operating costs due to higher diesel fuel prices will decrease our income from operations margins.
Large-scale disruption of social and commercial activity and financial markets may have a material adverse impact on our business, financial condition, results of operations and cash flows.
Major external events, including pandemic conditions that result in large-scale disruption of social and commercial activity, such as business closures and social restrictions, could adversely impact our volumes, costs and operational execution. While pandemic conditions can increase demand for medical waste and controlled substances waste collection, treatment and disposal or destruction, protective actions such as travel restrictions, quarantines, or facility closures may interfere with our ability to provide services. If such conditions were to be severe, resulting in a broad-based economic slow-down, it may have a material adverse impact on our financial condition, results of operations and cash flows and hinder our ability to grow our business and execute our business strategy.
Technology and Information Security Risks
Developments in technology could trigger a fundamental change in our industry, as waste streams are increasingly viewed as a resource, which may adversely impact volumes at our landfills and our profitability.
Our industry has recognized the value of the traditional waste stream as a potential resource. Research and development activities are ongoing to provide disposal alternatives that maximize the value of waste, including using waste as a source for renewable energy and other valuable by-products. We and many other companies are investing in and/or developing these new technologies. It is possible that such investments and technological advancements may reduce the cost of waste disposal or the value of landfill gas recovery to a level below our costs and may reduce the demand for landfill space. As a result, our revenues and margins could be adversely affected due to advancements in disposal alternatives.
If we are not able to develop new service offerings and protect intellectual property or if a competitor develops or obtains exclusive rights to a breakthrough technology, our financial results may suffer.
Our existing and proposed service offerings to customers require that we invest in, develop, license, and protect new technologies. Our Company is increasingly focusing on new technologies that automate and innovate our operations, improve the customer experience, provide alternatives to traditional disposal and maximize the resource value of waste. We are continuing our multi-year commitment to strategic investments in technology that prioritize the reduction of labor dependency for certain high-turnover jobs, further digitalize our customer self-service and implement technologies to further enhance the safety, reliability and efficiency of our operations. Research, development and implementation of enhanced technology often requires significant spending that may divert capital investment away from our traditional business operations. We may experience difficulties or delays in the research, development, production and/or marketing of new products and services or implementation of technologies in which we have invested or acquired, which may
35Table of Contentsnegatively impact our operating results and prevent us from recouping or realizing a return on these investments and acquisitions. Further, protecting our intellectual property rights and combating unlicensed copying and use of intellectual property is difficult, and an inability to obtain or protect new technologies could impact our services to customers and the development of new revenue sources. We rely on a combination of patents and trade secrets to protect our intellectual property, as well as confidentiality and non-disclosure agreements with employees, contractors, and other third parties. We cannot guarantee that these measures will fully prevent unauthorized access or use. Furthermore, there is no assurance that current or future applications will result in issued patents or, if issued, will provide adequate protection against competitors. If a competitor develops or obtains exclusive rights to a “breakthrough technology” that provides a revolutionary change in our industry, or if we have inferior intellectual property to our competitors, our financial results may suffer.
We are dependent on technology, and if our technology fails, our business would be adversely affected.
Our Company, our customers, and the economy in general are increasingly dependent on continuous information technology systems and digital tools to conduct operations. This dependence spans nearly all areas of our business, from overseeing and controlling critical infrastructure to processing and securing proprietary and sensitive information. The information technology systems and networks that we, our customers, suppliers, and other third parties rely on can be vulnerable to disruptions from cyberattacks, power failures, telecommunications outages, major events like natural disasters, acts of war or terrorism, employee errors, and other unexpected or uncontrollable occurrences. Should these systems be compromised or cease to function effectively, we may face substantial costs to repair or replace them, as well as potential liability, loss of crucial data, reputational harm, and interruptions to our services or operations.
Challenges in implementing new systems can also affect our ability to realize projected cost savings or other benefits. Significant system failures could impede our ability to timely collect and report financial results in accordance with applicable laws and regulations. Our post-acquisition efforts to integrate Stericycle’s technology and systems may result in substantial costs and uncertainties. Systems that increase our utilization of, and dependency on, third-party cloud computing services, and digital platforms to accommodate work-from-home arrangements, also increase various technology risks, including potential exposure to cyber incidents, loss of data, fraud, internal control challenges and other disruptions as a consequence of more employees accessing Company systems and information remotely in the course of their ordinary work.Inability to adapt to and manage the benefits and risks of artificial intelligence could expose us to liability or put us at a disadvantage.Artificial intelligence could disrupt certain aspects of our business and change use of technology in ways that are not yet known. Artificial intelligence technologies are subject to a variety of laws, including intellectual property, privacy, data protection and cybersecurity, consumer protection, competition, and equal opportunity laws, and are expected to be subject to increased regulation and new laws or new applications of existing laws. Such laws and regulations may present a variety of compliance risks. The use of artificial intelligence may also result in litigation, ethical concerns, and other legal and business risks. If we are not able to adapt and effectively incorporate potential advantages of artificial intelligence in our business, it may negatively impact our ability to compete. If we are not able to effectively manage the risks of artificial intelligence, we may suffer harm to our results of operations and reputation.
Significant cybersecurity incidents may negatively impact our business and our relationships with customers, vendors and employees and expose us to increased liability.
Substantially all aspects of our business operations rely on digital technology. We use computers, mobile devices, social networking and other online platforms to connect with our employees, customers, vendors, as well as other individuals and third parties. These uses give rise to cybersecurity risks, including security breach, ransomware, espionage, system disruption, theft and/or inadvertent, accidental, unlawful, unauthorized access, loss, alteration, destruction and/or disclosure or release of information. Our business necessitates the processing, collection, use, storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including individuals’ personal information, private and sensitive employment-related personal information, and financial and strategic information about the Company and other businesses. In addition to our own safeguarding efforts, we also rely on third parties to process, collect and store sensitive data, including a Payment Card Industry compliant third-party to protect our customers’ credit card information. We are regularly the target of attempted cyber intrusions, have experienced cyber intrusions, and we anticipate continuing to be subject to such attempts as cyber intrusions become increasingly sophisticated and more difficult to predict and protect against. Geopolitical conflicts and developments and technological advancements also
36Table of Contentsincrease the risk and likelihood of cyber incidents. As such, we must commit substantial resources to continuously monitor and further develop our networks and infrastructure to prevent, detect, and address the risk of unauthorized access, misuse, computer viruses and other events. These protections and other systems designed to mitigate cybersecurity risks may not fully defend against an attack or future cybersecurity incident, which can be unpredictable in nature.
Additionally, we cannot assure that any security measures that our third-party service providers have implemented will be effective against current or future security threats. We also cannot guarantee that our systems and networks or those of our third-party service providers or the equipment and related third-party software that we use to operate our network have not been breached or otherwise compromised, or that they and any software in our or their supply chains do not contain bugs, vulnerabilities, or compromised code that could result in a breach of, or disruption to, our systems and networks or the systems and networks of third parties that support us and our services.
Although we believe that the probability of occurrence of a significant cybersecurity incident is less than likely, if such an incident were to occur, the impact on the Company could be substantial. The magnitude of future cyber intrusions that result in a theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information (belonging to us or third parties) or intellectual property, or material interference with our information technology systems or the technology systems of third parties on which we rely cannot be predicted, such incidents could result in material business disruption, direct financial loss, remediation costs, negative publicity, brand damage, alleged violation of privacy laws, loss of customers, potential regulatory investigations and enforcement or private litigation liability and competitive disadvantage. To mitigate these risks, we maintain a cybersecurity insurance policy; however, due to policy terms, limits and exclusions, such insurance may not apply in all cases, and it may not be adequate to cover all liabilities incurred. Regulatory enforcement action concerning privacy infringement and security incidents is generally increasing, including significant fines recently imposed by European regulators. With the acquisition of Stericycle, we may be subject to short notification deadlines in international jurisdictions in the event of a significant cybersecurity incident that impacts us globally; it may not be possible for us to comply with such notification deadlines due to the time required to conduct investigations and assess the impact of such incident. Failure to comply with applicable laws and regulatory deadlines could attract enforcement action, penalties, litigation, investigations, proceedings, reputational harm and brand damage.
As the Company pursues its strategy to grow through acquisitions, including the acquisition of Stericycle, and to pursue new initiatives that improve our operations and cost structure, the Company is also expanding and improving its information technologies, resulting in a larger technological presence, utilization of cloud computing services, and corresponding exposure to cybersecurity risk. Certain new technologies, such as the use of autonomous vehicles, remote-controlled equipment, virtual reality, automation and artificial intelligence, present new and significant cybersecurity safety risks that must be analyzed and addressed before implementation. If we fail to assess and identify cybersecurity risks associated with acquisitions and new initiatives, we may become increasingly vulnerable to such risks.
Increased state, federal and international laws and regulations related to cybersecurity protections and disclosures will require additional resources for compliance, and any inability, or perceived inability, to adequately address new requirements could subject us to regulatory enforcement, private litigation, public criticism, disrupt our operations, cause us to lose customers, result in additional costs and legal liability, damage our reputation, and otherwise harm our business.Increasing regulatory focus on privacy and data protection issues and expanding laws could negatively impact our business, subject us to criticism and expose us to increased liability.The legislative and regulatory framework for security, privacy and data protection issues worldwide is rapidly evolving and becoming increasingly demanding and is likely to remain uncertain for the foreseeable future. We collect, use, share, retain, delete and otherwise process certain personal information and other sensitive information in connection with our operations and while providing services, including secure information destruction. We are subject to a variety of U.S. and international laws and regulations related to data privacy and the protection of confidential information, and we anticipate that regulation in this area will continue to expand. Applicable laws and regulations require disclosure and create other obligations for businesses that collect personal information and provide individual rights relating to personal information.
These laws and regulations are inconsistent across jurisdictions and are subject to evolving interpretations. Government officials, regulators, customers, privacy advocates and class action attorneys are increasingly scrutinizing how companies collect, process, use, store, share, transmit and destroy personal data. The continued emphasis on personal privacy and information security may result in customers requesting that we implement additional safeguards or controls. We must continually monitor the development and adoption of, and commit substantial time and resources to comply with,
37Table of Contentsnew and emerging laws and regulations and/ or expanded or novel interpretations of existing laws. Additionally, customers and regulators may seek to hold us responsible for the actions of third parties we work with, such as sub-processors, vendors, or developers.
Any inability, or perceived inability, to adequately address privacy and data protection concerns, even if unfounded, or to comply with laws, regulations, policies, industry standards, contractual obligations, or other legal obligations, including through acquired companies or third parties, could subject us to regulatory enforcement, private litigation, public criticism, business disruption, loss of customers, additional costs and legal liability, reputational damage, and other harm.Legal, Regulatory and Compliance Risks
Our operations are subject to environmental, health and safety laws and regulations, as well as contractual obligations that may result in significant liabilities.
There is risk of incurring significant environmental liabilities in the use, treatment, storage, transfer, processing and disposal or destruction of waste materials. Under applicable environmental laws and regulations, we could be liable if it is alleged that our operations cause environmental damage to our properties or to the property of other landowners, particularly as a result of the contamination of air, drinking water or soil. Under current law, we could also be held liable for damage caused by conditions that existed before we acquired the assets or operations involved and for conditions resulting from waste types or compounds previously considered non-hazardous but later determined to present possible threat to public health or the environment. The risks of successor liability and emerging contaminants are of particular concern as we execute our growth strategy, partially through acquisitions, because we may be unsuccessful in identifying and assessing potential liabilities during our due diligence investigations. Further, the counterparties in such transactions may be unable to perform their indemnification obligations owed to us. Any substantial liability for environmental damage could have a material adverse effect on our financial condition, results of operations and cash flows.In the ordinary course of our business, we have in the past, we are currently, and we may in the future, become involved in legal and administrative proceedings relating to land use and environmental laws and regulations. These include proceedings in which governmental entities, private groups or individuals seek to impose liability on us for alleged environmental damage or violation of statutes or desire to revoke or deny permits required for our operations. We generally seek to work with the authorities or other persons involved in these proceedings to resolve any issues raised. If we are not successful, the adverse outcome of one or more of these proceedings could result in, among other things, material increases in our costs or liabilities as well as material charges for asset impairments.
Further, we often enter into agreements with landowners imposing obligations on us to meet certain regulatory or contractual conditions upon site closure or upon termination of the agreements. Compliance with these agreements inherently involves subjective determinations and may result in disputes, including litigation. Costs to remediate or restore the condition of closed sites may be significant.
Our sustainability growth strategy includes significant planned and ongoing investments in our WM Renewable Energy segment; changes to federal and state renewable fuel policies could affect our financial performance, and such investments may not yield the results anticipated.
The primary drivers of renewable fuel development at our landfills are tax policies, such as the federal tax credits for RNG production and renewable electricity generation under the IRA, and federal and state incentive programs, such as the federal Renewable Fuel Standard (“RFS”) program, the California Low Carbon Fuel Standard and similar state programs that promote the production and use of renewable transportation fuels. At the federal level, oil refiners and importers are required through the RFS program to blend specified volumes of renewable transportation fuels with gasoline or buy RINs, from renewable fuel producers. The Company has invested, and continues to invest, in facilities that capture and process landfill gas into RNG so that we can participate in the RFS program, and the Company has grown and stated its intention to continue to grow its asset base to increase its RNG production.
RINs prices generally respond to regulations enacted by the EPA, as well as fluctuations in supply and demand. The value of the RINs is set through a market established by the RFS program, which market has historically been very volatile. The new U.S. presidential administration could seek to reduce existing renewable fuel targets in a new rulemaking or otherwise set reduced targets for renewable fuels under the RFS program in future rulemakings. Moreover, consistent with its prior approach, the new administration may also increase the frequency with which it grants small refinery exemptions from RFS program requirements. While we cannot predict what actions the new administration may take with respect to the RFS program, any changes to existing or future renewable fuel targets or more frequent approval of requests for small
38Table of Contentsrefinery exemptions could have a significant negative impact on demand for renewable fuels and the value of RINs. See Item 1. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation – WM Renewable Energy for additional information. Changes and volatility in the RINs market, or changes in the structure of the RFS program or other clean fuel standard programs, can and has impacted the financial performance of our facilities. Such changes could impact or alter our projected future investments, and such investments may not yield the results anticipated.The impact of climate change, and the adoption of climate change legislation or regulations restricting emissions of GHGs, could increase our costs to operate.We continue to assess the physical risks, such as sea-level rise, catastrophic storms and other extreme weather conditions and long-term shifts in climate patterns, and transition risks, such as regulatory, market, policy, and technology changes, to our operations from the effects of climate change. These risks are expected to be unpredictable and widespread.
Although we have made investments to mitigate risk associated with severe storm events, damage to our facilities or disruption of service caused by more frequent or more severe storms associated with climate extremes could negatively impact operating results. We have also identified risk to our assets and our employees associated with drought or water scarcity, flooding, extreme heat and rain events, and fire conditions associated with climate change. For example, wildfires influenced by climate change can damage landfill infrastructure such as gas collection systems, and extreme rain events and flooding in low-lying areas enhanced by sea level rise can result in greater maintenance expenses at our facilities, service disruption, erosion of the protective vegetative caps on our landfills and increased volumes of leachate to manage. Those areas of the country most prone to these occurrences have protocols in place, or are developing protocols to address these conditions, including employee safety, driver training, and equipment and facility protection protocols. We have incurred and will incur costs to develop and implement these protocols, and these protocols may not be effective in offsetting these risks. Additionally, the actions of others in response to climate change effects, such as rolling power blackouts, can result in service disruptions and increase our costs to operate.
Our landfill operations emit methane, identified as a GHG. Existing technology presents challenges to our ability to quantify landfill emissions precisely. Ongoing review by government agencies of emerging methane measurement technologies and related regulatory developments could result in changes to how we have historically reported GHG emissions and may result in increases in such emissions reported for our operations. Such regulatory developments could also result in increased compliance costs and adversely affect our operations. Specifically, see Item 1. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation – Climate and Sustainability for additional information.
Meanwhile, a number of legislative and regulatory efforts at the state, provincial, regional and federal levels and internationally aim to cap and/or curtail the emission of GHGs to ameliorate the effect of climate change, and otherwise to promote adaptation to climate change, support the transition to a low-carbon economy, and require disclosure of climate-related matters. We continue to monitor these efforts and the potential impacts to our operations. Should comprehensive federal climate change legislation be enacted, we expect it could impose operational and compliance costs that might not be offset by the revenue increases associated with our lower-carbon service options, the materiality of which we cannot predict. Climate change laws and regulations could also result in increased operational costs or disruption to the business of our customers, potentially impacting our operations and financial condition. We could experience damage to our reputation and brand, including as a result of a failure or perceived failure to respond responsibly and effectively to changes in legal and regulatory measures adopted to address climate change.
Failure to maintain an effective system of internal control over financial reporting, due to technology issues, difficulties integrating Stericycle’s operations and systems, or otherwise, could adversely affect our ability to provide accurate and timely financial statements, which may harm our business and reputation.It is critical that we maintain an effective system of internal control over financial reporting. As described further in Item 9A. Controls and Procedures, in accordance with SEC staff guidance, we have excluded Stericycle from the assessment of the effectiveness of our internal control over financial reporting as of December 31, 2024 contained in this Annual Report on Form 10-K; however, this exclusion may not extend beyond one year from the November 4, 2024 closing date. We are in the process of integrating Stericycle’s operations and systems to ensure the effectiveness of the internal control over financial reporting for this acquired business.
Establishing, testing and maintaining an effective system of internal control over financial reporting requires significant resources and time commitments on the part of our management and our finance staff, and the time and
39Table of Contentsexpenditures needed may exceed our expectations. If we encounter issues with technology systems or difficulties integrating Stericycle’s operations and systems into our system of internal control over financial reporting, and if we are unable to correct any issues encountered in a timely manner, our ability to record, process, summarize, and report financial data may be adversely affected, which may impact the accuracy, quality and completeness of our financial statements. Such failure could materially and adversely impact our business and subject us to potential investigations, liability, and penalties. Additionally, if we are unable to conclude that our internal control over financial reporting is effective in any future period (or if our auditors are unable to express an opinion on the effectiveness of our internal controls or conclude that our internal controls are ineffective), we could lose investor confidence and suffer an adverse effect on our stock price.
We could be subject to significant fines and penalties, and our reputation could be adversely affected, if we or third parties with whom we have a relationship fail to comply with U.S. or foreign laws or regulations.
It is our policy to comply with all applicable anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act (“FCPA”), and with applicable local laws of the foreign countries in which we operate, and we monitor our local partners’ compliance with such laws as well. Our reputation may be adversely affected if we were reported to be associated with corrupt practices or if we or our local partners failed to comply with such laws. Additionally, violations of such laws could subject us to significant fines and penalties.
Under previously reported settlements with governmental authorities relating to Stericycle’s compliance with the FCPA and other anti-corruption laws with respect to now-divested operations in Latin America, Stericycle engaged an independent compliance monitor for two years and is required to undertake compliance with self-reporting obligations for an additional year through November 2025 . Other matters may arise in the future involving alleged violations of the FCPA, other anti-corruption and anti-bribery laws, or laws prohibiting doing business with sanctioned parties. These could subject us to enforcement actions, fines, penalties, further oversight by an independent compliance monitor and/or self-reporting obligations, litigation, or orders of suspension or debarment, which could adversely affect our business, financial condition and results of operations.Currently pending or future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements.
As a large company with extensive operations, we are subject to various proceedings, lawsuits, disputes and claims arising in the ordinary course of our business, including governmental proceedings. Actions that have been filed against us, and that may be filed against us in the future, include personal injury, property damage, commercial, customer, and employment-related claims, including purported state and national class action lawsuits related to:
● alleged environmental contamination, including releases of hazardous materials and odors;
● sales and marketing practices, customer service agreements, prices and fees; and
● federal and state wage and hour and other laws.
The timing of the final resolutions to these types of matters is often uncertain. Additionally, the possible outcomes or resolutions to these matters could include adverse judgments or settlements, either of which could require substantial payments, adversely affecting our liquidity.Stericycle is, and has been, involved in government investigations, enforcement proceedings, private lawsuits and other disputes alleging noncompliance with applicable regulations, including alleged noncompliance with the Controlled Substances Act and other statutes involving its now-divested Domestic Environmental Solutions business of collecting, transporting, and destroying controlled substances from retail customers. With the acquisition of Stericycle, these matters may result in adverse consequences, including permit revocations or denials and civil, criminal and administrative penalties.
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Table of ContentsFinancial Risks
Our capital requirements and our business strategy could increase our expenses, cause us to change our growth and development plans, or result in an inability to maintain our desired credit profile.If economic conditions or other risks and uncertainties cause a significant reduction in our cash flows from operations, we may reduce or suspend capital expenditures, growth and acquisition activity, implementation of our business strategy, dividend declarations or share repurchases. We may choose to incur indebtedness to pay for these activities, although our access to capital markets is not assured and we may not be able to incur indebtedness at a cost that is consistent with current borrowing rates. We also may need to incur indebtedness to refinance scheduled debt maturities, and it is possible that the cost of financing could increase significantly, thereby increasing our expenses and decreasing our net income. Macroeconomic pressures, including inflation and rising interest rates, and market disruption are continuing. The U.S. government’s future actions regarding its debt ceiling and any possibility that the U.S. could default on its debt obligations could cause further interest rate increases, disrupt access to capital markets and trigger recessionary conditions. Further, our ability to execute our financial strategy, manage interest rate exposure and incur indebtedness is somewhat dependent upon our ability to maintain investment grade credit ratings on our senior debt. The credit rating process is contingent upon our credit profile and several other factors, many of which are beyond our control, including methodologies established and interpreted by third-party rating agencies. An important factor in our credit ratings is our leverage. We have communicated the Company’s expectation that our leverage will return to targeted levels about 18 months after the November 2024 acquisition of Stericycle. If we do not achieve our projected reduction in leverage, it could negatively impact our credit ratings. If we were unable to maintain our investment grade credit ratings in the future, our interest expense would increase and our ability to obtain financing on favorable terms could be adversely affected. We have $2.7 billion of debt as of December 31, 2024 that is exposed to changes in market interest rates within the next 12 months, associated with our commercial paper borrowings and tax-exempt bonds. If interest rates increase, our interest expense would also increase, lowering our net income and decreasing our cash flow.
We may use our $3.5 billion long-term U.S. and Canadian revolving credit facility (“$3.5 billion revolving credit facility”) to meet our cash needs, to the extent available, until maturity in May 2029. As of December 31, 2024, we had no outstanding borrowings under this facility. We had $1.2 billion of outstanding borrowings (net of related discount on issuance) under our commercial paper program and $224 million of letters of credit issued, both supported by this facility, leaving unused and available credit capacity of $2.1 billion as of December 31, 2024. In the event of a default under our $3.5 billion revolving credit facility we could be required to immediately repay all outstanding borrowings and make cash deposits as collateral for all obligations the facility supports, which we may not be able to do. Additionally, any such default could cause a default under many of our other credit agreements and debt instruments. Without waivers from lenders party to those agreements, any such default would have a material adverse effect on our ability to operate.Increases in the costs of obtaining adequate financial assurance, or the inadequacy of our insurance coverages, could negatively impact our liquidity and increase our liabilities.The amount of insurance we are required to maintain for environmental liability is governed by statutory requirements. We also carry a broad range of other insurance coverages that are customary for a company our size. To the extent our obligations for claims are more than we estimated, our insurance coverage is inadequate to cover our obligations, or our insurers are unable to meet their obligations, the requirement that we pay such obligations could have a material adverse effect on our financial results.
In addition, to fulfill our financial assurance obligations with respect to variable-rate tax-exempt debt, and final capping, closure, post-closure and environmental remediation obligations, we generally obtain letters of credit or surety bonds, rely on insurance, including captive insurance, fund trust and escrow accounts or rely upon WMI financial guarantees. Our financial position, which can be negatively affected by asset impairments, our credit profile and general economic factors, may increase the cost of our current financial assurance instruments, and changes in regulations may impose stricter requirements on the types of financial assurance that will be accepted. In the event we are unable to obtain sufficient surety bonding, letters of credit or third-party insurance coverage at reasonable cost, or one or more states cease to view captive insurance as adequate coverage, we would need to rely on other forms of financial assurance. It is possible that we could be required to deposit cash to collateralize certain obligations, which could negatively impact our liquidity.
41Table of ContentsWe may record material charges against our earnings due to impairments to our assets.Events that have in the past and may in the future lead to an impairment include, but are not limited to, shutting down a facility or operation, abandoning a development project, project cost overruns or the denial of an expansion permit. Additionally, declining waste volumes and development of, and customer preference for, alternatives to traditional waste disposal could warrant asset impairments. If we determine an asset or expansion project is impaired, we will charge against earnings any unamortized capitalized expenditures and advances relating to such asset or project reduced by any portion of the capitalized costs that we estimate will be recoverable, through sale or otherwise. We also carry a significant amount of goodwill on our Consolidated Balance Sheets, which is required to be assessed for impairment annually, and more frequently in the case of certain triggering events. We have in the past and may in the future be required to incur charges against earnings if such impairment tests indicate that the fair value of a reporting unit is below its carrying amount. Any such charges could have a material adverse effect on our results of operations.
We could face significant liabilities for withdrawal from Multiemployer Pension Plans.
We are a participating employer in a number of trustee-managed multiemployer defined benefit pension plans (“Multiemployer Pension Plans”) for employees who are covered by collective bargaining agreements. In the event of our withdrawal from a Multiemployer Pension Plan, we may incur expenses associated with our obligations for unfunded vested benefits at the time of the withdrawal. Depending on various factors, including potential legislative changes, future withdrawals could have a material adverse effect on results of operations or cash flows for a particular reporting period, and our ongoing costs of participation in Multiemployer Pension Plans may increase. See Notes 9 and 10 to the Consolidated Financial Statements for more information related to our participation in Multiemployer Pension Plans.
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FY 2025-12-31 (later)
Item 1A. Risk Factors.Our business, financial condition and results of operations are subject to numerous risks and uncertainties, some of which are not presently known or not currently believed to be material. You should carefully consider the following risk factors in conjunction with Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8. Financial Statements and Supplementary Data .
Strategy and Operational Risks
If we fail to implement our business strategy, our financial performance and our growth could be materially and adversely affected.
Our future financial performance and success are dependent in large part upon our ability to implement our business strategy successfully. Implementation of our strategy will require effective management of our operational, financial and human resources and will place significant demands on those resources. See Item 1. Business for more information on our business strategy. There are risks involved in pursuing our strategy, including the following:
● Our employees, customers or investors may not embrace and support our strategy.● A key element of our strategy is yield management through focus on price leadership, which has presented challenges to keep existing business and win new business at reasonable returns. Our unwillingness to pursue lower margin volumes may negatively affect our cash flows or results of operations.● We may be unsuccessful in implementing our technology-led automation and optimization strategy and other improvements to operational efficiency and such efforts may not yield the intended result.● We may not be able to maintain cost savings achieved, including through our automation and optimization or acquisition integration efforts, due to inflationary cost pressures or otherwise.
● Execution of our growth strategy, including acquisitions and expansion of operations, has caused, and may in the future cause, us to incur substantial additional indebtedness, which may divert capital away from our traditional business operations and other financial plans.
● Expansion of our Recycling Processing and Sales and Renewable Energy segments may introduce additional compliance and regulatory risks and additional volatility to our financial performance.● Our ability to make strategic acquisitions depends on our ability to identify desirable acquisition targets, negotiate advantageous transactions despite competition for such opportunities, fund such acquisitions on favorable terms, obtain regulatory approvals and realize the benefits we expect from those transactions.● Acquisitions, investments and/or new service offerings or lines of business may not increase our earnings to the extent or in the timeframe anticipated, or at all, due to complexities or difficulties operating in new markets or providing new service offerings or lines of business, failure of technologies to perform as expected, failure to achieve targeted revenue growth or market expansion, inability to manage costs within budget, integration issues, or regulatory issues and compliance costs, among others, and we may experience issues successfully integrating acquisitions into our internal controls, operations, and/or accounting systems.
● Integration of acquisitions and/or new services offerings or lines of business, such as our Healthcare Solutions segment, and additional expansion outside of North America, results in our business being subject to new regulations, greater exposure to risk of inadvertent noncompliance and additional compliance costs.● Liabilities associated with acquisitions, including ones that may exist only because of past operations of an acquired business, may prove to be more difficult or costly to address than anticipated, and businesses or assets we acquire may have undisclosed liabilities, despite our efforts to minimize exposure to such risks through due diligence and other measures.In addition to the risks set forth above, implementation of our business strategy could be affected by other factors beyond our control, such as increased competition, legal developments, government regulation, global geopolitical instability, general economic conditions, increased operating costs and changes in industry trends. Implementation of our strategy may not improve our operating results to the extent we anticipate, or at all.23
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We may not realize the strategic benefits, revenue and earnings growth, or cost synergies anticipated from the Stericycle acquisition.
The acquired Stericycle business, which is now presented as our Healthcare Solutions segment, is subject to numerous risks and uncertainties such as decreases in the volume of medical waste and controlled substances wastes or personal and confidential information collected from customers; disruptions resulting from deployment of operational or technological systems, including with respect to Healthcare Solution’s enterprise resource planning (“ERP”) system and related billing and collection issues and delays; customer loss resulting from frustration due to billing or service issues; delayed revenue growth from planned pricing increases due to factors including customer retention, stabilization of customer data engagement systems and processes, and more prolonged development of market and customer-specific insights than initially planned; changing market conditions in the healthcare industry; competition and demand for services for the medical waste, controlled substances waste and secure information destruction industries; commodity price volatility; changes in regulation of the collection, transportation, treatment and disposal or destruction of medical waste and controlled substances waste or the proper handling and protection of personal and confidential information; the level of government enforcement of regulations governing medical waste and controlled substances waste collection and treatment or the proper handling and protection of personal and confidential information; and the outcome of pending, future or settled litigation or investigations. If we are unsuccessful in achieving financial and operational targets and implementing the Healthcare Solutions business strategy, it could negatively impact our realization of benefits from the acquisition, as well as our stock price and our future business and financial results.
The benefits that are expected to result from our acquisition of Stericycle also depend, in part, on our ability to realize anticipated cost synergies. Our success in realizing these benefits and cost synergies, and the timing of this realization, depends on the successful integration of the Stericycle business. The acquisition of Stericycle may not result in realization of the benefits and cost synergies that we currently expect, and we cannot guarantee that these benefits and cost synergies will be achieved within anticipated time frames. Additionally, we have, and may continue to, incur substantial expenses in connection with the integration of the Stericycle business, which may exceed expectations and offset certain benefits.Our operations must comply with extensive existing regulations, and changes in regulations, including with respect to emerging contaminants and extended producer responsibility, can restrict or alter our operations, increase our operating costs, increase our tax liabilities, reduce revenues, or require us to make additional capital expenditures.Stringent government regulations at the federal, state, provincial and local level in the U.S. and Canada, as well as other international jurisdictions where we operate, have a substantial impact on our operations, and compliance with such regulations is costly. See Item 1. Business – Regulation for additional information. Many complex laws, rules, orders and interpretations govern environmental protection, health, safety, land use, zoning, transportation, ethical business conduct, data privacy and security, and other related and similar subjects. Among other things, governmental regulations and enforcement actions restrict our operations at times and may adversely affect our financial condition, results of operations and cash flows by imposing limitations or other conditions on constructing or expanding facilities; collection and disposal pricing and volume; transportation of out-of-state waste and management and processing of certain waste streams.
Regulations affecting the siting, design and closure of landfills require us, at times, to undertake investigatory or remedial activities, curtail operations or close landfills temporarily or permanently. We have significant financial obligations relating to final capping, closure, post-closure and environmental remediation at our existing landfills and we establish accruals for these estimated costs. Expenditures could be accelerated or materially exceed our accruals due to earlier than expected closure of landfills; the types of waste collected and manner in which it is transported and disposed of, including actions taken in the past by companies we have acquired or third-party landfill operators; environmental regulatory changes; new information about waste types previously collected, or other emerging contaminants. Similar issues can also result in a significant increase in operating costs; for example, developments in recent years related to management of per- and polyfluoroalkyl substances (“PFAS”) have increased our landfill operating costs. See Item 1. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation – PFAS for additional information. We may face increased exposure to testing, remediation and litigation costs as a result of new and emerging PFAS regulations and requirements.
Regulations establishing extended producer responsibility (“EPR”) are being considered or implemented in many places around the world, including in certain states in the U.S. and provinces and territories in Canada. EPR regulations are designed to place either partial or total responsibility on producers of consumer-packaged goods and other products to fund the post-use life cycle of the products and packaging they create. At the same time, concerns over price and
24Table of Contentsaffordability have led some jurisdictions to scale back previously enacted EPR requirements, and certain programs have faced lawsuits and potential constitutional review, creating uncertainty for long-term planning. For additional information, See Item 1. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation – Extended Producer Responsibility . A significant reduction in the waste, recycling and other streams we manage, including with respect to quality and volume, could have a material adverse effect on our financial condition, results of operations and cash flows. Conversely, changes in program requirements or deregulatory rulings in jurisdictions where we have adapted to meet customer demand could affect our operations, financial condition or results of operations.
We are also subject to additional laws and regulations in the U.S. and internationally concerning transportation, management and disposal or destruction of medical waste streams, including regulations that govern the definition, generation, segregation, handling, packaging, transportation, treatment, storage and disposal or destruction of medical waste and controlled substances waste, along with extensive recordkeeping and documentation requirements. Our secure information destruction services are subject to additional laws and regulations regarding proper handling and protection of personal and confidential information. Relaxation of enforcement, government shutdowns, or other changes in governmental regulation of medical waste and controlled substances waste and personal and confidential information could increase the number of competitors we face or reduce or delay the need for these services.
The current U.S. presidential administration has implemented substantial changes to foreign trade policy and is generally in favor of reducing regulation, including environmental regulation. The impact and timing of these shifts in regulatory policy impacting our industry and our Company remain uncertain, as many are subject to ongoing litigation and agency review. Reduction of regulation may have a favorable impact on our operating costs, but the extensive environmental regulation applicable to our industry is also a barrier to rapid entry that benefits our Company. It is likely that some policies adopted by this administration will benefit us and others will negatively affect us.
It is our policy to comply with all applicable anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act (“FCPA”), and with applicable local laws of the foreign countries in which we operate, and we monitor our local partners’ compliance with such laws as well. Our reputation may be adversely affected if we were reported to be associated with corrupt practices or if we or our local partners failed to comply with such laws. Additionally, violations of such laws could subject us to significant fines and penalties.If we encounter regulatory compliance issues in the course of operating our business, we may experience adverse publicity, which may intensify if such noncompliance results in legal liability. Any legal liability or adverse publicity from such noncompliance may harm our reputation and result in difficulties in attracting new customers, or retaining existing customers, which would negatively impact our results of operations and financial condition.
Our business is subject to operational and safety risks, including the risk of injury to employees and others.Providing environmental and waste management services, including constructing and operating landfills, transfer stations, processing facilities, recycling facilities and other disposal or destruction facilities, and landfill gas-to-energy facilities, involves risks such as truck accidents, equipment defects, malfunctions and failures, and improper use of dangerous equipment. Additionally, we closely monitor and manage landfills to minimize the risk of waste mass instability, releases of hazardous materials, and odors that are sometimes triggered by weather or natural disasters. There are also risks presented by the potential for subsurface heat reactions causing elevated landfill temperatures and increased production of leachate, landfill gas and odors, and we have proactively incurred increased costs to manage leachate in response to this risk. We build and operate natural gas fueling stations, some of which also serve the public or third parties. Operation of fueling stations and landfill gas collection and control systems, as well as operation of heavy machinery and management of flammable materials at our recycling facilities and transfer stations, involves additional risks of fire and explosion. The Healthcare Solutions business requires handling of medical waste and controlled substances waste and operates incineration facilities. Incidents such as truck accidents, damaged or leaking containers, improper storage of medical waste and controlled substances waste, placement of prohibited materials into the waste stream, or malfunctioning plant or incineration equipment could result in exposure to contaminated or infectious waste or other hazardous materials.
Any of these risks could potentially result in injury, illness or death of employees and others. These risks could also result in a need to shut down or reduce operation of facilities, increased operating costs and exposure to liability for pollution, public nuisance, and other environmental damage, and property damage or destruction. If we were to incur substantial liabilities in excess of any applicable insurance, our business, results of operations and financial condition could be adversely affected. Any such incidents could also tarnish our reputation and reduce the value of our brand. Additionally,
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a major operational failure, even if suffered by a competitor, may bring enhanced scrutiny and regulation of our industry, with a corresponding increase in operating expense.We may be unable to obtain or maintain required permits for our operations or expand existing permitted capacity at our landfills, due to land scarcity, public opposition or otherwise, which can require us to identify disposal alternatives, resulting in decreased revenue and increased costs.Our ability to meet our financial and operating objectives depends in part on our ability to obtain and maintain the permits, authorizations, approvals, certificates, and other governmental permissions necessary to operate landfill sites, recycling facilities, compost facilities, processing facilities, landfill gas-to-energy facilities, incineration facilities and transfer stations in the various jurisdictions in which we operate. Changes in applicable laws and regulations could require us to obtain new permits or to change the way in which we operate our business. Even where permits are obtained, they may contain conditions or restrictions that limit our ability to operate efficiently. Permits to build, operate and expand solid waste management facilities, including landfills and transfer stations, have become more difficult and expensive to obtain and maintain. Permits often take years to obtain as a result of numerous hearings and compliance requirements with regard to zoning, environmental and other regulations. These permits are also often subject to resistance from citizen or other groups and other political pressures. Local communities and citizen groups, adjacent landowners or governmental agencies may oppose the issuance of a permit or approval we may need, allege violations of the permits under which we currently operate or laws or regulations to which we are subjected, or seek to impose liability on us for alleged environmental damage. Such actions could also impact our ability to do business by causing reputational harm. Our ability to receive permits is also impacted by land scarcity, particularly in densely populated areas. Diminishing disposal capacity, typically in proximity to major metropolitan areas, sometimes requires us to transport waste by rail or find alternative disposal solutions in affected areas, increasing our operating costs. Certain governmental bodies are in various stages of adopting or considering the adoption of requirements for environmental justice reviews as part of certain permitting decisions. These policies generally require permitting agencies to give heightened attention to a project’s potential to disproportionately impact low-income and minority communities and to proactively plan for community engagement. Responding to permit challenges has, at times, increased our costs and extended the time associated with establishing new facilities and expanding existing facilities. Our failure to obtain the required permits and necessary capacity expansion to operate our business, including our landfills, could have a material adverse impact on our financial condition, results of operations and cash flows.
If we are unable to attract, hire, develop and retain key team members and a high-quality workforce, and comply with applicable employment regulations, it could result in business and strategic disruption and increased costs, negatively impacting our results of operations.
Our operations require us to attract, hire, develop and retain a high-quality workforce; this includes key individuals in leadership and specialty roles, as well as a very large number of skilled drivers, technicians and other front-line and back-office team members necessary to provide our environmental services. We experience significant competition to hire and retain certain front-line positions, such as commercial truck drivers. Additionally, the market for employees that serve on our digital team and support our investments in our technology-led automation and optimization strategy is highly competitive. We also compete to attract skilled business leaders, and our own key team members are sought after by our competitors and other companies. Labor shortages, as we have experienced in the past, could result in increased costs due to wage adjustments, overtime hours, training costs and inability to service customers. As an employer of over 60,000 individuals throughout the U.S. and Canada, as well as Western Europe and India, we are subject to numerous employment related regulations, including federal and state wage and hour laws and rapidly changing laws related to employment eligibility. If we are not able to attract, hire, develop and retain a high-quality workforce with the necessary skills and expertise, if we experience significant employee turnover, or if we fail to comply with applicable employment regulations, it can result in business and strategic disruption, increased costs, and loss of institutional knowledge, which could negatively impact our results of operations.
Increases in our labor costs as a result of unions organizing, Multiemployer Pension Plan withdrawals, changes in regulations related to labor unions or increases in minimum wages, could adversely affect our future results.
Labor unions continually attempt to organize our employees, and these efforts will likely continue in the future. Certain groups of our employees are currently represented by unions, and we have negotiated collective bargaining agreements with these unions. Additional groups of employees may seek union representation in the future, and, if successful, would enhance organized labor’s leverage to obtain higher than expected wage and benefits costs and resist
26Table of Contentsthe introduction of new technology and other initiatives, which can result in increased operating expenses and lower net income. If we are unable to negotiate acceptable collective bargaining agreements, our operating expenses could increase significantly as a result of work stoppages, including strikes. We are a participating employer in a number of trustee-managed multiemployer defined benefit pension plans (“Multiemployer Pension Plans”) for employees who are covered by collective bargaining agreements. In the event of our withdrawal from a Multiemployer Pension Plan, we may incur significant expenses associated with our obligations for unfunded vested benefits at the time of the withdrawal that could have a material adverse effect on results of operations or cash flows.
Additionally, a large portion of our workforce are hourly personnel, and many of these individuals, particularly in our recycling business, are paid at rates related to federal and state minimum wages. Increases in minimum wage rates, or the enactment of new wage-related legislation, may significantly increase our labor costs. Any of these matters could adversely affect our financial condition, results of operations and cash flows.The seasonal nature of our business, severe weather events resulting from climate change and event driven projects cause our results to fluctuate, and prior performance may not be indicative of our future results.Our financial and operating results may fluctuate for many reasons. Our operating revenues and volumes typically experience seasonal increases in the summer months, that are reflected in second and third quarter revenues and results of operations. Service or operational disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly affect the operating results of the geographic areas affected. Extreme weather events may also lead to supply chain disruption and delayed project development, or disruption of our customers’ businesses, reducing the amount of waste generated by their operations. Conversely, certain destructive weather and climate conditions, such as wildfires in the Western U.S. and hurricanes that most often impact our operations in the Southern and Eastern U.S. during the second half of the year, can increase our revenues in the geographic areas affected as a result of the waste volumes generated by these events. Margins on weather-related and other event-driven projects may not be consistent with our ordinary course business. For these and other reasons, operating results in any period may not be indicative of operating results for any other period. Our stock price may be negatively impacted by interim variations in our results.We have made significant investments in an extensive natural gas truck fleet, which makes us partially dependent on the availability of natural gas and fueling infrastructure and vulnerable to natural gas prices, and requirements to transition away from our current vehicle fleet to electric powered vehicles could impair our investments and result in cost increases and significant additional capital investment.
We operate a large fleet of natural gas vehicles, and we plan to continue to invest in these assets for our collection fleet. However, natural gas fueling infrastructure is not yet broadly available in the U.S. and Canada; as a result, we have constructed and operate natural gas fueling stations, some of which also serve the public or pre-approved third parties. It will remain necessary for us to invest capital in fueling infrastructure to power our natural gas fleet. Fluctuations in the price and supply of natural gas or diesel fuel could substantially increase our operating expenses; a reduction in the existing cost differential between natural gas and diesel fuel could materially reduce the benefits we anticipate from our investment in natural gas vehicles.There is increasing pressure to reduce the use of fossil fuel in the heavy-duty truck industry, and some regulatory bodies are pursuing requirements for using alternative engine technology, such as electric powered vehicles, rather than natural gas or diesel vehicles. This is resulting in regulatory actions to advance the adoption of zero-emission vehicles and a shift away from tax incentives and grants for natural gas trucks and RNG infrastructure. See Item 1. Business – Regulation – Investment in Natural Gas Vehicles and Infrastructure for additional information. Regulation mandating an accelerated transition to electric powered vehicles would increase our cost to acquire vehicles needed to service our customers, and capital investment required to establish sufficient charging infrastructure could be significant. Additionally, the investments we have made in an industry-leading natural gas fleet and infrastructure could be impaired. Tax incentives and grants that advance the adoption of zero-emissions vehicles and lead to a shift away from natural gas trucks and RNG infrastructure would likely also negatively impact our investments in landfill gas-to-energy facilities.
We may not be able to achieve our sustainability-related goals, including reduction of our greenhouse gas ("GHG") emissions, or achieve the results and benefits anticipated from our sustainability-related investments and initiatives within planned timelines or anticipated budget.
We have set goals to reduce our GHG emissions and announced other sustainability-related goals and initiatives. We may not be able to meet such goals or implement such initiatives in the manner or on timelines contemplated due to
27Table of Contentschallenges including, but not limited to, unforeseen costs or delays, changes in how GHG emissions are calculated or otherwise reported, supply chain disruptions, regulatory impacts, integration of acquired assets or businesses, technology limitations or technical difficulties associated with achieving such goals. Changes to our business or asset base that were not contemplated when we set our sustainability-related goals could adversely impact our progress towards these goals and require us to adjust them. These changes could negatively impact public perception of our Company and stakeholders may view these changes unfavorably. Also, despite voluntarily announcing such sustainability goals, we may receive pressure from investors or other groups to adopt more aggressive sustainability-related goals that may not be technically, operationally, or financially feasible.
In addition, we have made significant investments in our Recycling Processing and Sales and Renewable Energy segments. Timing and achievement of the results and benefits anticipated from these investments may be impacted by the numerous risks and uncertainties including financial and operating performance; availability of technology and financing; compliance with regulations; inability to develop, obtain or scale necessary equipment; technology and innovations; challenges arising from the availability or cost of materials and infrastructure; difficulty obtaining regulatory approvals or permits; commodity price fluctuation and general economic conditions. (Also see Item 1A. Risk Factors — Our revenues, earnings and cash flows fluctuate based on changes in commodity prices and demand and may fluctuate substantially without notice in the future and — Changes to federal and state renewable fuel policies could affect the financial performance of our Renewable Energy segment ). Favorable expectations regarding potential investment tax credits or other benefits stemming from the IRA and the OBBBA may not materialize or could fail to meet expectations. See Item 1. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation – Tax Legislation for additional information.
We have also forecasted or projected certain operational and financial information with respect to our sustainability investments and initiatives. For example, the amount of gas produced over time at landfills can vary depending on many factors, including weather and the composition of the inbound waste stream. Gas curves are inherently uncertain, and if we have less gas than predicted at a site where we have invested in RNG infrastructure, it may take longer to achieve our return on investment. Relatedly, the quality of the gathered gas is subject to the composition of the waste deposited at our landfills, and the prevalence of certain chemical compounds may adversely affect the usability of such gas and require further investment in the treatment and management of such compounds. Regulations requiring diversion of organic waste away from landfills could have the effect of decreasing the amount of landfill gas produced over time in our landfills.Focus on, and regulation of, sustainability performance and disclosure can result in increased costs, risk of noncompliance, damage to our reputation and related adverse effects.The nature, scope, and complexity of matters that our Company must assess, quantify and disclose are expanding due to current, proposed, and recently enacted governmental reporting requirements pertaining to sustainability and climate-related risks and other topics, such as water usage, waste production, labor, human capital, environmental justice, cybersecurity, privacy, and risk oversight. See Item 1. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation – Climate and Sustainability for more information. Methodology and timelines for mandatory reporting requirements may be inconsistent with requirements enacted by other governmental entities, including with respect to measuring emissions and requiring a determination of “materiality” that may differ from traditional disclosure requirements under U.S. federal securities laws.
Our industry faces challenges to implement these rapidly developing disclosure requirements, as well as the risk of enforcement actions by governmental and regulatory agencies for noncompliance. Significant expenditures and commitment of time by management, employees and consultants is involved in developing, implementing and overseeing policies, practices, additional disclosures and internal controls related to environmental and sustainability risk and performance. Public statements with respect to sustainability matters are subject to heightened scrutiny related to the risk of potential “greenwashing,” i.e. , allegations of misleading information or false claims overstating potential sustainability benefits made by governmental authorities, non-governmental organizations and other private actors. An inability to implement such policies, practices, and internal controls and maintain compliance with laws and regulations, or a perception among stakeholders that our sustainability disclosures and goals are insufficient or our goals are unattainable, could harm our reputation and competitive position and negatively impact our stock price and business performance.
28Table of ContentsExternal and Industry RisksMarket disruption, including labor shortages, external strikes, supply chain constraints and major external events, and macroeconomic pressures, including inflation, have recently had, and may in the future have, an adverse impact on our business and results of operations.
Market disruption resulting from labor shortages, external labor disputes and strikes, supply chain and transportation constraints, major external events, including pandemic conditions, and macroeconomic pressures have recently had, and may in the future have, an adverse impact on our results and can create risk and uncertainty in financial outlook. Inflation can and has increased costs for the goods and services we purchase, particularly for labor, repair and maintenance, and subcontractor costs. Aspects of our business rely on third-party transportation providers, and such services have become more limited and expensive. Significant restrictions and tariffs on foreign trade have a negative impact on our recycling export business and our cross-border commerce, particularly with Canada, decrease paper mills’ demand for recycled corrugated cardboard used in packaging and increase the cost of certain equipment and other materials used in our operations that we procure from outside the U.S., including our trucks and certain equipment used to implement our sustainability growth strategy. Geopolitical conflicts and the resulting international responses may also exacerbate market disruption, leading to volatility in commodity prices, impacts on the availability and cost of energy, increased cyberattacks, and vendor and supplier disruptions across the global supply chain. Major external events, like pandemics or widespread social restrictions, could also have an adverse impact on our volumes, costs and operations. The extent and duration of the impact of these challenges are subject to numerous external factors beyond our control. If such impacts are prolonged and substantial, they could have a material negative effect on our results of operations.
Accelerated and pronounced economic pressures, such as rising interest rates and inflationary cost pressures, have in the past and may in the future impact our cost structure and capital expenditures. Significant components of our operating expenses vary directly as we experience changes in revenue due to volume and inflation, and we may not be able to dynamically manage our cost structure in response to such changes. A significant portion of our revenue is tied to a price escalation index with a lookback provision, resulting in a timing lag in our ability to recover increased costs under those contracts during periods of rapid inflation. Separately, for many of our customers we provide services under multi-year contracts that can restrict our ability to increase prices and the timing of such increases. The inability to adequately increase prices to offset increased costs and inflationary pressures, or otherwise mitigate the impact of these conditions on our business, will increase our costs of doing business and reduce our margins.The environmental services industry is highly competitive, and if we cannot successfully compete in the marketplace, our business, financial condition and operating results may be materially adversely affected.We encounter intense competition from governmental, quasi-governmental and private sources in all aspects of our operations and when expanding to new lines of business or new markets. We principally compete with large national waste management companies, counties and municipalities that maintain their own waste collection and disposal or recycling 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. In recent years, the industry has seen some additional consolidation, though the industry remains intensely competitive. Counties and municipalities may have financial competitive advantages because tax revenues are available to them and tax-exempt financing is more readily available to them. Also, such governmental units may attempt to impose flow control or other restrictions that would give them a competitive advantage. In addition, some of our competitors may have lower financial expectations, allowing them to reduce their prices to expand sales volume or to win competitively-bid contracts, including large national accounts and exclusive franchise arrangements with municipalities. When this happens, we may lose customers and be unable to execute our pricing strategy, resulting in a negative impact to our revenue growth from yield on base business.Our revenues, earnings and cash flows fluctuate based on changes in commodity prices and demand and may fluctuate substantially without notice in the future.Prices and demand for recyclables fluctuate and are particularly susceptible to volatility based on macroeconomic conditions and regulations. The fluctuations in the market prices or demand for these commodities can affect our operating income and cash flows negatively, as we experienced in 2025, or positively, as we experienced in 2024. The decline in market prices in 2025 for recyclable commodities resulted in a year-over-year decrease in revenue of $166 million, and
29Table of Contentsthe increase in market prices in 2024 for recyclable commodities resulted in a year-over-year increase in revenue of $245 million.
Regulations affecting, and in some cases restricting, the international flow of certain recyclables have led, and could in the future lead, to a reduction in export activity for such recyclables, as well as higher quality requirements and higher processing costs. We have made significant investments in our recycling business to increase automation and reduce labor dependency and address increases in regulatory- and customer-driven quality requirements for commodities. These investments increase our exposure to commodity price fluctuations. Future regulation, tariffs, international trade policies or other initiatives, including regulations addressing climate change or GHG emissions, may impact supply and demand of material and availability of counterparties, or increase operating costs, which could impact the profitability of our recycling operations. If we do not effectively manage changes in demand and commodity prices for recyclable materials, or if we do not successfully execute our sustainability growth strategy, our investments in recycling infrastructure and technology may not yield the results anticipated.
Fluctuation in energy-related prices also affects our business, including recycling of plastics manufactured from petroleum products. Our Renewable Energy segment generates and sells credits referred to as RINs. RINs prices generally respond to regulations enacted by the EPA, as well as fluctuations in supply and demand, and have historically been very volatile. Additionally, significant variations in the price of biogas, electricity and other energy-related products that are marketed and sold by our landfill gas recovery operations can result in a corresponding impact to our revenue from yield from such operations. Recent expansion of our Renewable Energy segment may introduce additional risks and volatility to our financial performance.
Increasing customer preference for alternatives to landfill disposal and bans on certain types of waste could reduce our landfill volumes and cause our revenues and operating results to decline.
Our customers are increasingly diverting waste to alternatives to landfill disposal, such as recycling and composting, while also working to reduce the amount of waste they generate. In addition, many state and local governments mandate diversion, recycling and waste reduction at the source and prohibit the disposal of certain types of materials at landfills, such as recyclables (cardboard, bottles and cans), yard waste, food waste and electronics. Where organic waste is not banned from disposal in landfills, some large customers such as grocery stores and restaurants are choosing to divert their organic waste from landfills. Zero-waste goals (sending no waste to the landfill) have been set by many large North American and global companies and government agencies. This increased focus on minimizing climate impacts may require the Company to invest in higher-cost technologies. These developments reduce the volume of waste going to our landfills, which may affect the prices that we can charge for landfill disposal. Our landfills currently provide our highest income from operations margins. Reducing landfilled organic waste also reduces the amount of landfill gas produced from our landfills, adversely impacting our landfill gas-to-energy facilities. If we are not successful in expanding our service offerings, growing lines of businesses to service waste streams that do not go to landfills, and providing alternative services for customers that wish to reduce waste entirely, then our revenues and operating results may decline. Additionally, despite the development of new service offerings and lines of business, it is possible that our revenues and our income from operations margins could be negatively affected due to disposal alternatives.With a heightened awareness of the global problems caused by plastic waste in the environment, and actual or perceived risks for human health, many governments have passed ordinances banning certain types of plastics from sale or use. The most common materials banned include plastic bags and straws, polystyrene plastic and some types of single use packaging. These bans have increased pressure by manufacturers on our recycling facilities to accept a broader array of materials in curbside recycling and composting programs to alleviate public pressures to ban the sale of those materials. However, there are currently no or limited viable end markets for recycling many of these materials, and inclusion of such materials in our recycling stream increases contamination and operating costs that can negatively affect the results of our recycling operations.General economic conditions and consumer trends can directly and adversely affect revenues for our services, our income from operations margins and our overall financial results.
Our business is directly affected by changes in consumer trends and economic factors that are outside of our control, including consumer preferences and priorities, consumer confidence, inflation, interest rates and access to capital markets. A weak economy generally results in decreased consumer spending and decreases in volumes of waste generated, which negatively impacts the ability to grow through new business or service upgrades, and may result in customer turnover and reduction in customers’ waste service needs. Consumer uncertainty and the loss of consumer confidence may also reduce
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the number and variety of services requested by customers. Additionally, a weak market for consumer goods, or reduction in international trade due to tariffs or other factors, can significantly decrease demand by paper mills for recycled corrugated cardboard used in packaging, which can constrict availability of counterparties and negatively impact commodity prices and our operating income and cash flows. While sustainability remains a priority for many customers, we have observed a shift in prioritization by some companies with respect to sustainability objectives, including a decreased willingness to pay premium prices for recycled materials or enhanced sustainability solutions, which impacts demand for, and viability of, some of our offerings.A decrease in waste volumes generated results in an increase in competitive pricing pressure; such economic conditions may also interfere with our ability to implement our pricing strategy. Many of our contracts have price adjustment provisions that are tied to an index such as the Consumer Price Index. Our costs may increase more than the increase, if any, in the Consumer Price Index, partially due to our relatively high fixed-cost structure. We may not be able to dynamically manage our cost structure in response to shifting volume levels and vendor costs, and our cost structure may not correlate with the Consumer Price Index or the waste industry. An economic recession or other economic weakness is likely to negatively impact our revenues and margins.We provide service to a number of governmental entities, municipalities, and large national accounts. During periods of economic weakness, governmental entities and municipalities can suffer significant financial difficulties, due in part to reduced tax revenue and/or high-cost structures. During these periods, such entities, and our non-governmental customers, could be unable to pay amounts owed to us or renew contracts with us at previous or increased rates. In addition, the financial difficulties of municipalities could reduce investor demand for municipal bonds and cause a correlating increase in interest rates. As of December 31, 2025, we had $1.8 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities. If market dynamics resulted in repricing of our tax-exempt bonds at significantly higher interest rates, we would incur increased interest expenses that may negatively affect our operating results and cash flows.
Reduction in volumes of medical waste, controlled substances wastes, and personal and confidential information, and changing conditions in the healthcare industry could adversely affect our financial results.
Through our Healthcare Solutions segment, we provide compliance-based services that rely on the generation of medical waste, controlled substances waste and personal and confidential information by our customers. The volume of such material may be impacted by macroeconomic trends associated with manufacturing and industrial markets, healthcare market dynamics, and trends associated with an increase in work-from-home arrangements and electronic and digital record keeping. Long-term trends resulting from these factors could reduce the demand for these services.In addition, in the U.S. and elsewhere, the healthcare industry is evolving to meet competing demands for increased healthcare coverage of a growing and aging population and economic pressures to reduce healthcare costs. As a result of these dynamics, hospital networks are consolidating physician practices into their networks, independent practices are consolidating, and healthcare providers are focused on cutting costs within their businesses. These changes and consolidation of the customer base increase the competitive nature of the healthcare waste industry and exert downward pricing pressure, which could adversely affect our financial results.Changes to applicable tax laws and regulation or interpretation thereof or the imposition of new or increased taxes may increase our tax liabilities and could adversely affect our operating results and cash flows .
We are subject to various complex and evolving U.S. federal, state, local and non-U.S. tax laws. Existing tax laws, policies, statutes, rules, regulations or ordinances, including those related to any non-U.S. tax jurisdictions in which we operate, could be interpreted, changed, modified or applied adversely to us, in each case, possibly with retroactive effect. Any significant variance in our interpretation of current tax laws or a successful challenge of one or more of our tax positions by the U.S. Internal Revenue Service or other tax authorities could increase our future tax liabilities and adversely affect our operating results and cash flows.
Shortages in diesel fuel supply or increases in diesel fuel prices will increase our operating expenses.The price and supply of diesel fuel can fluctuate significantly based on international, political and economic circumstances, as well as other factors outside our control, such as actions by oil and gas producers, regional production patterns, weather conditions and environmental concerns. We need diesel fuel to run a notable portion of our collection and transfer trucks and our equipment used in our landfill operations. Fuel supply shortages and price increases could substantially increase our operating expenses. Regardless of any offsetting surcharge programs, increased operating costs
31Table of Contentsdue to higher diesel fuel prices will decrease our income from operations margins.
Technology, Intellectual Property and Information Security Risks
If we are not able to develop new service offerings and protect intellectual property, or if a competitor develops or obtains exclusive rights to a breakthrough technology, our financial results may suffer.
Our existing and proposed service offerings to customers require that we invest in, develop, license, and protect new technologies. Our Company is continuing our multi-year commitment to strategic investments in technology that automate and innovate our operations, improve the customer experience, provide alternatives to traditional disposal and maximize the resource value of waste. Research, development and implementation of enhanced technology often requires significant spending that may divert capital investment away from our traditional business operations. We may experience difficulties or delays in the research, development, production and/or marketing of new products and services or implementation of technologies in which we have invested or acquired, which may negatively impact our operating results and prevent us from recouping or realizing a return on these investments and acquisitions. Further, protecting our intellectual property rights and combating unlicensed copying and use of intellectual property is difficult and expensive, and an inability to obtain or protect new technologies could impact our services to customers and the development of new revenue sources. We rely on a combination of patents and trade secrets to protect our intellectual property, as well as confidentiality and non-disclosure agreements with employees, contractors, and other third parties. We cannot guarantee that these measures will fully prevent unauthorized access or use. Furthermore, there is no assurance that current or future applications will result in issued patents or, if issued, will provide adequate protection against competitors or other third parties. If a competitor or other third party develops or obtains exclusive rights to a “breakthrough technology” that provides a revolutionary change in our industry, or if we have inferior intellectual property to our competitors, our financial results may suffer.
We believe we have developed a reputation for high-quality service, reliability and social and environmental responsibility, and we believe our brand symbolizes these attributes. Intellectual property including the WM brand name, trademarks and logos are powerful sales and marketing tools, and we devote significant resources to promoting and protecting them.
We are increasingly dependent on technology, and if our technology fails, our business would be adversely affected.
Our Company, our customers, and the economy in general are increasingly dependent on continuous information technology systems and digital tools to conduct operations. This dependence spans nearly all areas of our business, from overseeing and controlling critical infrastructure to processing and securing proprietary and sensitive information. The information technology systems and networks that we, our customers, suppliers, and other third parties rely on can be vulnerable to disruptions from cyberattacks, power failures, telecommunications outages, major events like natural disasters, acts of war or terrorism, employee errors, and other unexpected or uncontrollable occurrences. Systems that increase our utilization of, and dependency on, third-party cloud computing services and digital platforms also increase various technology risks, including potential exposure to cyber incidents, loss of data, fraud, internal control challenges and other disruptions. Challenges in implementing new systems can affect our ability to comply with laws and regulations and realize projected cost savings or other benefits. Should our systems be compromised or cease to function effectively, we may face substantial costs to repair or replace them, as well as potential liability, loss of crucial data, reputational harm and interruptions to our services or operations.Inability to adapt to and manage the benefits and risks of artificial intelligence could expose us to liability or put us at a disadvantage.Artificial intelligence could disrupt certain aspects of our business and change use of technology in ways that are not yet known. Artificial intelligence technologies are subject to a variety of laws and compliance risk, including intellectual property, data protection and privacy, cybersecurity, consumer protection, competition, and equal opportunity laws, and are expected to be subject to increased regulation and new laws or new applications of existing laws. The use of artificial intelligence may also result in litigation, ethical concerns, and other legal and business risks. If we are not able to adapt and effectively incorporate potential advantages of artificial intelligence in our business, it may negatively impact our ability to compete. If we are not able to effectively govern the use and manage the risks of artificial intelligence, we may suffer harm to our results of operations and reputation.
32Table of ContentsSignificant cybersecurity incidents may negatively impact our business and our relationships with customers, vendors and employees and expose us to increased liability.
Substantially all aspects of our business operations rely on digital technology. We use computers, mobile devices, social networking and other online platforms to connect with our employees, customers, vendors, as well as other individuals and third parties. These uses give rise to cybersecurity risks, including security breach, ransomware, espionage, system disruption, theft and/or inadvertent, accidental, unlawful, unauthorized access, loss, alteration, destruction and/or disclosure or release of information. Our business necessitates the processing, collection, use, storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including individuals’ personal information, private and sensitive employment-related personal data, and financial and strategic information about the Company and other businesses. In addition to our own safeguarding efforts, we also rely on third parties to process, collect and store sensitive data, including a Payment Card Industry compliant third-party to protect our customers’ credit card information. We are regularly the target of attempted cyber intrusions, have experienced cyber intrusions, and anticipate continuing to be subject to such attempts as cyber intrusions become increasingly sophisticated and more difficult to predict and protect against. Technological advancements, including the progression of the capabilities of artificial intelligence, also increase the risk, likelihood and precision of cyber incidents. As such, we must commit substantial resources to continuously monitor and further enhance our networks and infrastructure to prevent, detect, and address the risk of unauthorized access, misuse, computer malware and other events. These protections and other systems designed to mitigate cybersecurity risks may not fully defend against an attack or future cybersecurity incident, which can be unpredictable in nature. Data security measures that our third-party service providers have implemented may not be effective against all current or future security threats. We also cannot guarantee that the systems, networks, equipment or software used by us or our third-party service providers have not been breached or otherwise compromised.
Although we believe that the probability of occurrence of a significant cybersecurity incident is less than likely, if such an incident were to occur, the impact on the Company could be substantial. The magnitude of future cyber intrusions that result in a theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information (belonging to us or third parties) or intellectual property, or material interference with our information technology systems or the technology systems of third parties on which we rely cannot be predicted, such incidents could result in material business disruption, direct financial loss, remediation costs, reputational harm, brand damage, alleged violation of privacy laws, loss of customers, potential regulatory investigations and enforcement or private litigation liability and competitive disadvantage. To mitigate these risks, we maintain a cybersecurity insurance policy; however, due to policy terms, limits and exclusions, such insurance may not apply in all cases, and it may not be adequate to cover all liabilities incurred. Regulatory enforcement action concerning privacy infringement and security incidents is generally increasing, including significant fines recently imposed by U.K. and European regulators. Our Healthcare Solutions operations in Western Europe may subject us to short notification deadlines in international jurisdictions in the event of a significant cybersecurity incident that impacts us globally; it may not be possible for us to comply with such notification deadlines due to the time required to conduct investigations and assess the impact of such incident. Failure to comply with applicable laws and regulatory deadlines could attract enforcement action, penalties, litigation, investigations, proceedings, reputational harm and brand damage.
The Company is also expanding and improving its information technologies, resulting in a larger technological presence, utilization of cloud computing services, and corresponding exposure to cybersecurity risk. Certain new technologies, such as the use of autonomous vehicles, remote-controlled equipment, virtual reality, automation and artificial intelligence, present new and significant cybersecurity safety risks that must be analyzed and addressed before implementation. If we fail to assess and identify cybersecurity risks associated with acquisitions and new initiatives, we may become increasingly vulnerable to such risks.Increasing regulatory focus on privacy and data protection issues and expanding laws could negatively impact our business, subject us to criticism and expose us to increased liability.The legislative and regulatory framework for security, privacy and data protection issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. We collect, use, share, retain, delete and otherwise process certain personal data and other sensitive information in connection with our operations and are subject to increasingly demanding U.S. and international laws and regulations related to data protection and privacy and the protection of confidential information. These laws and regulations are inconsistent across jurisdictions and are subject to evolving interpretations. Government officials, regulators, customers, privacy advocates and class action attorneys are increasingly scrutinizing how companies collect, process, use, store, share, transmit and destroy personal data. The
33Table of Contentscontinued emphasis on personal privacy and information security may result in customers requesting that we implement additional safeguards or controls. One recent focus area involves the use of phone, text and email information for sales, marketing and other business purposes. We must continually monitor the development and adoption of, and commit substantial time and resources to comply with, new and emerging laws and regulations and/or expanded or novel interpretations of existing laws. Additionally, customers and regulators may seek to hold us responsible for the actions of third parties we work with, such as sub-processors, vendors or developers.
Increased state, federal and international laws and regulations related to cybersecurity protections and disclosures will require additional resources for compliance, and any inability, or perceived inability, to adequately address new requirements could subject us to regulatory enforcement, private litigation, public criticism, disrupt our operations, cause us to lose customers, result in additional costs and legal liability, damage our reputation, and otherwise harm our business.
Any inability, or perceived inability, to adequately address privacy and data protection concerns, even if unfounded, or to comply with laws, regulations, policies, industry standards, contractual obligations, or other legal obligations, including through acquired companies or third parties, could subject us to regulatory enforcement, private litigation, public criticism, business disruption, loss of customers, additional costs and legal liability, reputational damage and other harm.Legal, Regulatory and Compliance Risks
Our operations are subject to environmental, health and safety laws and regulations, as well as contractual obligations that may result in significant liabilities.
There is risk of incurring significant environmental liabilities in the use, treatment, storage, transfer, processing and disposal or destruction of waste materials. Under applicable environmental laws and regulations, we could be liable if it is alleged that our operations cause environmental damage to our properties or to the property of other landowners, particularly as a result of the contamination of air, drinking water or soil. Under current law, we could also be held liable for damage caused by conditions that existed before we acquired the assets or operations involved and for conditions resulting from waste types or compounds previously considered non-hazardous but later determined to present possible threat to public health or the environment. The risks of successor liability and emerging contaminants are of particular concern as we execute our growth strategy, partially through acquisitions, because we may be unsuccessful in identifying and assessing potential liabilities during our due diligence investigations. Further, the counterparties in such transactions may be unable to perform their indemnification obligations owed to us. Any substantial liability for environmental damage could have a material adverse effect on our financial condition, results of operations and cash flows.In the ordinary course of our business, we have in the past, we are currently, and we may in the future, become involved in legal and administrative proceedings relating to land use and environmental laws and regulations. These include proceedings in which governmental entities, private groups or individuals seek to impose liability on us for alleged environmental damage, violation of statutes, failure to meet contractual remediation conditions or desire to revoke or deny permits required for our operations. We generally seek to work with the authorities or other persons involved in these proceedings to resolve any issues raised. If we are not successful, the adverse outcome of one or more of these proceedings could result in, among other things, material increases in our costs or liabilities as well as material charges for asset impairments.
Changes to federal and state renewable fuel policies could affect the financial performance of our Renewable Energy segment.
The primary drivers of value for renewable fuel produced at our landfills are tax policies, such as the federal tax credits for investments in RNG production under the IRA and OBBBA, and federal and state incentive programs, such as the federal RFS program, the California Low Carbon Fuel Standard and similar state programs that promote the production and use of renewable transportation fuels, which are all subject to change. At the federal level, oil refiners and importers are required through the RFS program to blend specified volumes of renewable transportation fuels with gasoline or buy RINs from renewable fuel producers. The Company has made significant investments in facilities that capture and process landfill gas into RNG so that we can participate in the RFS program. RINs prices generally respond to regulations enacted by the EPA, as well as fluctuations in supply and demand. The value of the RINs is set through a market established by the RFS program, which market has historically been volatile. While the previous rules under the RFS program reflected the outsized role of biogas under the program and delivered reforms benefiting the solid waste sector, the current administration has retroactively lowered 2024 blending volumes, proposed reductions for 2025, set low targets for 2026–2027 and begun to grant small refinery exemptions from RFS program requirements. See Item 1. Business – Regulation –
34Table of ContentsRecent Developments and Focus Areas in Policy and Regulation – Renewable Energy for additional information. Changes and volatility in the RINs market, or changes in the structure of the RFS program or other clean fuel standard programs, can and has impacted the financial performance of our facilities. Further changes could impact future growth investments in our Renewable Energy segment.The impact of climate change, and the adoption of climate change legislation or regulations restricting emissions of GHGs, could increase our costs to operate.We continue to assess the physical risks, such as sea-level rise, catastrophic storms and other extreme weather conditions and long-term shifts in climate patterns, and transition risks, such as regulatory, market, policy, and technology changes, to our operations from the effects of climate change. These risks are expected to be unpredictable and widespread. Damage to our facilities or disruption of service caused by more frequent or more severe storms associated with climate extremes could negatively impact operating results. We have also identified risk to our assets and our employees associated with drought or water scarcity, flooding, extreme heat and rain events, and fire conditions associated with climate change. For example, wildfires influenced by climate change can damage landfill infrastructure such as gas collection systems, and extreme rain events and flooding in low-lying areas enhanced by sea level rise can result in greater maintenance expenses at our facilities, service disruption, erosion of the protective vegetative caps on our landfills and increased volumes of leachate to manage. We have incurred and will incur costs to develop and implement protocols to address these conditions, but these protocols may not be effective in offsetting these risks. Additionally, the actions of others in response to climate change effects, such as rolling power blackouts, can result in service disruptions and increase our costs to operate.
Landfill operations emit methane, identified as a GHG. Existing technology presents challenges to quantify landfill emissions precisely. Ongoing review by government agencies of emerging methane measurement technologies and related regulatory developments could result in changes to how we have historically reported GHG emissions and may result in increases in such emissions reported for our operations. Such regulatory developments could also result in increased compliance costs and adversely affect our operations. See Item 1. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation – Climate and Sustainability for additional information.
Meanwhile, a number of legislative and regulatory efforts at the state, provincial, regional and federal levels and internationally aim to cap and/or curtail the emission of GHGs to ameliorate the effect of climate change, and otherwise to promote adaptation to climate change, support the transition to a low-carbon economy, and require disclosure of climate-related matters. We continue to monitor these efforts and the potential impacts to our operations. Should comprehensive federal climate change legislation be enacted, we expect it could impose operational and compliance costs that might not be offset by the revenue increases associated with our lower-carbon service options. Climate change laws and regulations could also result in increased operational costs or disruption to the business of our customers, potentially impacting our operations and financial condition. We could experience damage to our reputation and brand, including as a result of a failure or perceived failure to respond responsibly and effectively to changes in legal and regulatory measures adopted to address climate change.
Failure to maintain an effective system of internal control over financial reporting, due to technology issues, difficulties integrating Stericycle’s operations and systems, or otherwise, could adversely affect our ability to provide accurate and timely financial statements, which may harm our business and reputation.It is critical that we maintain an effective system of internal control over financial reporting. Establishing, testing and maintaining an effective system of internal control over financial reporting requires significant resources and time commitments on the part of our management and our finance staff, and the time and expenditures needed may exceed our expectations. If we encounter issues with technology systems, including issues related to Stericycle’s ERP system or difficulties integrating Stericycle’s operations and systems into our system of internal control over financial reporting, and if we are unable to correct any issues encountered in a timely manner, our ability to record, process, summarize, and report financial data may be adversely affected, which may impact the accuracy, quality and completeness of our financial statements. Such failure could materially and adversely impact our business and subject us to potential investigations, liability, and penalties. Additionally, if we are unable to conclude that our internal control over financial reporting is effective in any future period (or if our auditors are unable to express an opinion on the effectiveness of our internal controls or conclude that our internal controls are ineffective), we could lose investor confidence and suffer an adverse effect on our stock price.
35Table of ContentsCurrently pending or future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements.
As a large company with extensive operations, we are subject to various proceedings, lawsuits, disputes and claims arising in the ordinary course of our business, including governmental proceedings. Actions that have been filed against us, and that may be filed against us in the future, include personal injury, property damage, commercial, customer, and employment-related claims, including purported state and national class action lawsuits related to:
● alleged environmental contamination, including releases of hazardous materials and odors;
● sales and marketing practices, customer service agreements, prices and fees; and
● federal and state wage and hour and other laws.
The timing of the final resolutions to these types of matters is often uncertain. Additionally, the possible outcomes or resolutions to these matters could include adverse judgments or settlements, either of which could require substantial payments, adversely affecting our liquidity.At the time of our acquisition of Stericycle, it was, and had been, involved in certain government investigations, enforcement proceedings, lawsuits and other disputes alleging noncompliance with applicable regulations, including alleged noncompliance with the Controlled Substances Act and other statutes involving its now-divested Domestic Environmental Solutions business, which collected, transported and destroyed controlled substances from retail customers. Resolution of these matters may result in adverse consequences, including permit revocations or denials and civil, criminal and administrative penalties.Financial Risks
Our capital requirements and our business strategy could increase our expenses, cause us to change our growth and development plans, or result in an inability to maintain our desired credit profile.If economic conditions or other risks and uncertainties cause a significant reduction in our cash flows from operations, we may reduce or suspend capital expenditures, growth and acquisition activity, implementation of our business strategy, dividend declarations or share repurchases. We may choose to incur indebtedness to pay for these activities, although our access to capital markets is not assured, and we may not be able to incur indebtedness at a cost that is consistent with current borrowing rates. We also may need to incur indebtedness to refinance scheduled debt maturities, and it is possible that the cost of financing could increase significantly, thereby increasing our expenses and decreasing our net income. Further, our ability to execute our financial strategy, manage interest rate exposure and incur indebtedness is somewhat dependent upon our ability to maintain investment grade credit ratings on our senior debt. The credit rating process is contingent upon our credit profile and several other factors, many of which are beyond our control, including methodologies established and interpreted by third-party rating agencies. An important factor in our credit ratings is our leverage. If we do not achieve our projected reduction in leverage following our acquisition of Stericycle, it could negatively impact our credit ratings. If we were unable to maintain our investment grade credit ratings in the future, our interest expense would increase and our ability to obtain financing on favorable terms could be adversely affected. We have $2.9 billion of debt as of December 31, 2025 that is exposed to changes in market interest rates within the next 12 months, associated with our commercial paper borrowings and tax-exempt bonds. If interest rates increase, our interest expense would also increase, lowering our net income and decreasing our cash flow.
We may use our $3.5 billion long-term U.S. and Canadian revolving credit facility (“$3.5 billion revolving credit facility”) to meet our cash needs, to the extent available, until maturity in May 2029. As of December 31, 2025, we had no outstanding borrowings under this facility. We had $1.1 billion of outstanding borrowings (net of related discount on issuance) under our commercial paper program and $227 million of letters of credit issued, both supported by this facility, leaving unused and available credit capacity of $2.2 billion as of December 31, 2025. In the event of a default under our $3.5 billion revolving credit facility we could be required to immediately repay all outstanding borrowings and make cash deposits as collateral for all obligations the facility supports, which we may not be able to do. Additionally, any such default could cause a default under many of our other credit agreements and debt instruments. Without waivers from lenders party to those agreements, any such default would have a material adverse effect on our ability to operate.Increases in the costs of obtaining adequate financial assurance, or the inadequacy of our insurance coverages, could negatively impact our liquidity and increase our liabilities.The amount of insurance we are required to maintain for environmental liability is governed by statutory requirements.
36Table of ContentsWe also carry a broad range of other insurance coverages that are customary for a company our size. To the extent our obligations for claims are more than we estimated, our insurance coverage is inadequate to cover our obligations, or our insurers are unable to meet their obligations, the requirement that we pay such obligations could have a material adverse effect on our financial results.
In addition, to fulfill our financial assurance obligations with respect to variable-rate tax-exempt debt, and final capping, closure, post-closure and environmental remediation obligations, we generally obtain letters of credit or surety bonds, rely on insurance, including captive insurance, fund trust and escrow accounts or rely upon WMI financial guarantees. Our financial position, which can be negatively affected by asset impairments, our credit profile and general economic factors, may increase the cost of our current financial assurance instruments, and changes in regulations may impose stricter requirements on the types of financial assurance that will be accepted. In the event we are unable to obtain sufficient surety bonding, letters of credit or third-party insurance coverage at reasonable cost, or one or more states cease to view captive insurance as adequate coverage, we would need to rely on other forms of financial assurance. It is possible that we could be required to deposit cash to collateralize certain obligations, which could negatively impact our liquidity.We may record material charges against our earnings due to impairments to our assets.Events that have in the past and may in the future lead to an impairment include, but are not limited to, shutting down or divesting an underperforming or non-strategic asset or operation, abandoning a development project, project cost overruns or the denial of an expansion permit. Additionally, declining waste volumes and development of, and customer preference for, alternatives to traditional waste disposal could warrant asset impairments. If we determine an asset or expansion project is impaired, we will charge against earnings any unamortized capitalized expenditures and advances relating to such asset or project reduced by any portion of the capitalized costs that we estimate will be recoverable, through sale or otherwise. We also carry a significant amount of goodwill on our Consolidated Balance Sheets, which is required to be assessed for impairment annually, and more frequently in the case of certain triggering events. We have in the past and may in the future be required to incur charges against earnings if such impairment tests indicate that the fair value of a reporting unit is below its carrying amount. Any such charges could have a material adverse effect on our results of operations.
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Item 7 · Management's Discussion & Analysis
+347 paragraphs −463 paragraphs ~347 changed
FY 2024-12-31 (earlier)
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.This section includes a discussion of our results of operations for the three years ended December 31, 2024. This discussion may contain forward-looking statements. See “Cautionary Statement about Forward-Looking Statements” in Part I of this Annual Report on Form 10-K for more information. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or anticipated results. These risks and uncertainties include, but are not limited to, those described in Part I, “Item 1A. Risk Factors ” and elsewhere in this report and may also be described from time to time in our future reports filed with the U.S. Securities and Exchange Commission (“SEC”). The following discussion should be read considering those disclosures and together with the Consolidated Financial Statements and the notes thereto.OverviewWe are North America’s leading provider of comprehensive environmental solutions, primarily providing services throughout the United States (“U.S.”) and Canada. We partner with our customers and the communities we serve to manage and reduce waste at each stage from collection to disposal, while recovering valuable resources and creating clean, renewable energy. We own or operate the largest network of landfills throughout the U.S. and Canada. In order to make disposal more practical for larger urban markets, where the distance to landfills is typically farther, we manage transfer stations that consolidate, compact and transport waste efficiently and economically. Our solid waste business is operated and managed locally by our subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, recycling and resource recovery services. Through our subsidiaries, including our Waste Management Renewable Energy (“WM Renewable Energy”) segment, we are also a leading developer, operator and owner of landfill gas-to-energy facilities in the U.S. and Canada that produce renewable electricity and renewable natural gas, which is a significant source of fuel that we allocate to our natural gas fleet. Additionally, we are a leading recycler in the U.S. and Canada, handling materials that include paper, cardboard, glass, plastic and metal.Stericycle AcquisitionOn November 4, 2024, we completed our acquisition of all outstanding shares of Stericycle for $62.00 per share in cash, pursuant to an Agreement and Plan of Merger dated June 3, 2024. Total enterprise value of the acquisition was $7.2 billion (net of cash acquired) when including the assumption of $0.5 billion of debt and the repayment of approximately $0.8 billion of net debt. The acquisition expands our offerings in the U.S., Canada and parts of Western Europe. The post-closing operating results of Stericycle have been included in our Consolidated Financial Statements, as a new reportable segment referred to as WM Healthcare Solutions.
46Table of ContentsFor the year ended December 31, 2024, we incurred approximately $160 million of acquisition and integration related costs, which are primarily classified as “Selling, general and administrative expenses.” Refer to Note 19 for more information on the performance of our WM Healthcare Solutions segment.
Our senior management evaluates, oversees and manages the financial performance of our business through five reportable segments, referred to as (i) Collection and Disposal - East Tier (“East Tier”); (ii) Collection and Disposal - West Tier (“West Tier”); (iii) Recycling Processing and Sales; (iv) WM Renewable Energy and (v) WM Healthcare Solutions. Our East and West Tiers along with certain ancillary services (“Other Ancillary”) that are not managed through our Tier segments, but that support our collection and disposal operations, form our “Collection and Disposal” businesses. We also provide additional services not managed through our five reportable segments, which are presented as Corporate and Other.Collection and DisposalOur Collection and Disposal businesses provide integrated environmental services, including collection, transfer, disposal and resource recovery services. We evaluate our Collection and Disposal businesses primarily through two geographic segments, East Tier and West Tier. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. Additionally, we provide Other Ancillary services that are not managed through the Tier segments but that support our collection and disposal operations. Other Ancillary includes specialized services performed for customers that have differentiated needs. These specialized services are targeted at large industrial customers managed through our Sustainability and Environmental Solutions (“SES”) business or geographically dispersed customers managed through our Strategic Business Solutions (“WMSBS”) business. Also included within Other Ancillary are the results of non-operating entities that provide financial assurance and self-insurance support for our business, net of intercompany activity.
Our Collection and Disposal businesses’ operating revenues are primarily generated from fees charged for our collection, transfer, disposal and resource recovery services. Revenues from our collection operations are influenced by factors such as collection frequency, type of collection equipment furnished, type and volume or weight of the waste collected, distance to the disposal facility or recycling facility and our disposal costs. Revenues from our landfill operations consist of tipping fees, which are generally based on the type and weight or volume of waste being disposed of at our disposal facilities. Fees charged at transfer stations are generally based on the weight or volume of waste deposited, considering our cost of loading, transporting and disposing of the solid waste at a disposal site.
Included within our Collection and Disposal businesses are landfills having (i) 20 third-party power generating facilities converting our landfill gas to fuel electricity generators; (ii) 16 third-party renewable natural gas (“RNG”) facilities processing landfill gas to be sold to natural gas suppliers and (iii) six third-party projects delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes. In return for providing our landfill gas, we receive royalties from each facility, including the benefit of a 15% royalty from our WM Renewable Energy segment based on net operating revenue generated through the sale of RNG, renewable identification numbers (“RINs”), electricity and capacity, Renewable Energy Credits (“RECs”) and related environmental attributes from the 84 landfill beneficial use renewable energy projects owned by WM Renewable Energy on our active landfills, which is eliminated in consolidation.Recycling Processing and Sales
Our Recycling Processing and Sales segment includes the processing and sales of materials collected from residential, commercial and industrial customers. The materials are delivered to and processed at one of our many recycling facilities. Through our brokerage business, we also manage the marketing of recycling commodities that are processed in our facilities and by third parties by maintaining comprehensive service centers that continuously analyze market prices, logistics, market demands and product quality.Recycling Processing and Sales revenues generally consist of tipping fees and the sale of recycling commodities to and/or on behalf of third parties. Our Recycling Processing and Sales segment excludes the collection of recycled materials
47Table of Contentsfrom our residential, commercial, and industrial customers which is included within our Collection and Disposal businesses.
WM Renewable Energy
Our WM Renewable Energy segment develops, operates and promotes projects for the beneficial use of landfill gas. Landfill gas is produced naturally as waste decomposes in a landfill. The methane component of the landfill gas is a readily available, renewable energy source that can be gathered and used beneficially as an alternative to fossil fuel. WM Renewable Energy converts landfill gas into several sources of renewable energy to be sold which include RNG, electricity and capacity, heat and/or steam. WM Renewable Energy also generates and sells (i) RINs under the Renewable Fuel Standard (“RFS”) program; (ii) other credits under a variety of state programs associated with the use of RNG in our compressed natural gas fleet and (iii) RECs associated with the production of electricity. The RINs, RECs, and other credits are sold to counterparties who are obligated under the regulatory programs and have a responsibility to procure RINs, RECs, and other credits proportionate to their fossil fuel production and imports. RINs and RECs prices generally fluctuate in response to regulations enacted by the Environmental Protection Agency (“EPA”) or other regulatory bodies, as well as changes in supply and demand.
As of December 31, 2024, we had 102 landfill gas beneficial use projects producing commercial quantities of methane gas at owned or operated landfills. For 65 of these projects, the processed gas is used to fuel electricity generators. The electricity is then sold to public utilities, municipal utilities or power cooperatives. For 23 of these projects, the gas is used at the landfill or delivered by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes. For 11 of these projects, the landfill gas is processed to pipeline quality RNG and then sold to natural gas suppliers. Additionally, three of these projects are on third-party landfills. The revenues from these facilities are primarily generated through the sale of RNG, RINs, electricity and capacity, heat and/or steam, RECs and related environmental attributes. WM Renewable Energy is charged a 15% royalty on net operating revenue from these facilities residing on our active and closed landfills from our Collection and Disposal and Corporate and Other businesses, which is eliminated in consolidation. Additionally, WM Renewable Energy operates and maintains seven third-party landfill beneficial gas use projects in return for service revenue. Our Collection and Disposal and Corporate and Other businesses benefit from these projects as well as 52 additional third-party landfill beneficial gas use projects in the form of royalties.
WM Healthcare Solutions
Our WM Healthcare Solutions segment includes (i) Regulated Waste and Compliance Services (“RWCS”) which provide compliance programs and collection, processing, and disposal of regulated and specialized waste, including medical, pharmaceutical and hazardous waste and (ii) Secure Information Destruction (“SID”) services, which provide for the collection of personal and confidential information for secure destruction and recycling of sorted office paper. RWCS are provided to customers in the U.S., Canada, Ireland and the United Kingdom (“U.K.”). SID services are provided to customers in the U.S., Belgium, Canada, France, Germany, Ireland, Luxembourg, the Netherlands and the U.K.
Our WM Healthcare Solutions customers are primarily in the following industries: enterprise healthcare (i.e., hospitals, health systems, and national and corporate healthcare), practices and care providers (i.e., physician offices, surgery centers, veterinary clinics, nursing and long-term care facilities, dental clinics, clinics and urgent care, dialysis centers, and home health organizations), and pharmacy labs and research centers. Our WM Healthcare Solutions businesses also provide services to airports and seaports, education institutions, funeral homes and crematories, government and military, banks and professional services, and other businesses. While the WM Healthcare Solutions businesses manage large volumes of waste and other materials, the average volume per customer site is relatively small.
Our customers typically enter into a contract for the provision of services on a scheduled basis, including weekly, monthly or on an as-needed basis over the contract term. Under the contract terms, the WM Healthcare Solutions businesses receive fees based on a monthly, quarterly or annual rate and/or fees based on contractual rates depending upon measures including the volume, weight, and type of waste. Operating revenues are invoiced based on the terms of the underlying contract either on a regular basis, or as services are performed and are generally due within a short period of time after invoicing based upon normal terms and conditions for our business type and the geography of the services performed.
48
Table of Contents
As of December 31, 2024, our WM Healthcare Solutions businesses include a global fleet of approximately 6,100 routed trucks, tractors, collection vans and small duty vehicles. Our WM Healthcare Solutions segment operates out of approximately 361 leased and owned facilities worldwide with 69 autoclaves or other alternative medical waste treatment facilities, 18 medical waste incinerator facilities, 107 SID processing facilities and 167 transfer stations. Included within our WM Healthcare Solutions segment are 35 locations that are classified as held for sale as of December 31, 2024.Corporate and OtherWe also provide additional services that are not managed through our operating segments, which are presented in this report as Corporate and Other. This includes the activities of our corporate office, including costs associated with our long-term incentive program, expanded service offerings and solutions (such as our investments in businesses and technologies that are designed to offer services and solutions ancillary or supplementary to our current operations) as well as our closed sites. Also included within our Corporate and Other businesses closed sites are (i) six third-party power generating facilities converting our landfill gas to fuel electricity generators; (ii) two third-party projects delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes and (iii) two third-party RNG facilities processing landfill gas to be sold to natural gas suppliers in return for a royalty. Additionally, Corporate and Other benefits from a 15% royalty from our WM 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 15 landfill beneficial use renewable energy projects owned by WM Renewable Energy on our closed sites, which is eliminated in consolidation.
Included in the fees we charge for our services is our energy surcharge and other charges that are intended to pass through costs to customers.Business EnvironmentThe waste industry is a comparatively mature and stable industry. However, customers increasingly expect more of their waste materials to be recovered and those waste streams are becoming more complex. In addition, many state and local governments mandate diversion, recycling and waste reduction at the source and prohibit the disposal of certain types of waste at landfills. We monitor these developments to adapt our service offerings. As companies, individuals and communities look for ways to be more sustainable, we promote our comprehensive services that go beyond our core business of collecting and disposing of waste in order to meet their needs. This includes expanding traditional recycling services, increasing organics collection and processing, providing medical waste services and expanding our renewable energy projects to meet the evolving needs of our diverse customer base. As North America’s leading provider of comprehensive environmental solutions, we are taking big, bold steps to catalyze positive change – change that will impact our Company as well as the communities we serve. Consistent with our Company’s long-standing commitment to sustainability and environmental stewardship, we have published our 2024 Sustainability Report, providing details on our sustainability-related performance and outlining progress towards our 2030 sustainability goals. The Sustainability Report conveys the strong linkage between the Company’s sustainability goals and our growth strategy, inclusive of the planned and ongoing expansion of the Company’s Recycling Processing and Sales and WM Renewable Energy segments. The information in this report can be found at sustainability.wm.com but it does not constitute a part of, and is not incorporated by reference into, this Annual Report on Form 10-K. For further discussion see Item 1. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation .
We encounter intense competition from governmental, quasi-governmental and private service providers based on pricing, and to a much lesser extent, the nature of service offerings, particularly in the residential line of business. Our industry is directly affected by changes in general economic factors, including increases and decreases in consumer spending, business expansions and construction activity. These factors generally correlate to volumes of waste generated and impact our revenue. Negative economic conditions and other macroeconomic trends can and have caused customers to reduce their service needs. Such negative economic conditions, in addition to competitor actions, can impact our strategy to negotiate, renew, or expand service contracts and grow our business. We also encounter competition for acquisitions and growth opportunities. General economic factors and the market for consumer goods, in addition to regulatory developments, can also significantly impact commodity prices for the recyclable materials we sell. Significant components of our operating expenses vary directly as we experience changes in revenue due to volume and inflation. Volume changes
49Table of Contentscan fluctuate significantly by line of business and volume changes in higher margin businesses can impact key financial metrics. We must dynamically manage our cost structure in response to volume changes and cost inflation.
We believe the Company’s industry-leading asset network and strategic focus on investing in our people and our digital platform will give the Company the necessary tools to address the evolving challenges impacting the Company and our industry. In line with our commitment to continuous improvement and a differentiated customer experience, we remain focused on our automation and optimization investments to enhance our operational efficiency and change the way we interact with our customers. Advancements made through these initiatives are intended to seamlessly and digitally connect all enterprise functions required to service customers and provide the best experience. We have made significant progress in executing this technology enablement strategy to automate and optimize certain elements of our service delivery model. The key benefits are reduced labor dependency on certain high-turnover jobs, particularly in customer experience, recycling and residential collection, while further elevating our customer self-service through digitalization and implementation of technologies to enhance the safety, reliability and efficiency within our collection operations. Additionally, in 2022, we implemented a new general ledger accounting system, complementary finance enterprise resource planning system and a human capital management system, which will continue to drive operational and service excellence by empowering our people through a modern, simplified and connected employee experience.
We sometimes experience margin pressures and variability in earnings and margins from our commodity-driven businesses, specifically within our Recycling Processing and Sales and WM Renewable Energy segments. While recycling commodity prices have recovered in 2024 from the low levels experienced in 2023, commodity prices are still below levels seen at the beginning of 2022. The impacts of commodity price fluctuations are not currently material to our WM Renewable Energy segment; however, as we continue to make investments to grow that segment, we may experience more significant impacts from fluctuations in the prices of electricity, natural gas, RINs and RECs. We continue to take proactive steps to adjust our business models to protect against the down-side risk of changes in commodity prices.
Variability in economic conditions, including inflation, interest rates, employment trends and supply chain reliability, can create risk and uncertainty in financial outlook. We take proactive steps to recover and mitigate inflationary cost pressures through our overall pricing efforts and by managing our costs through efficiency, labor productivity, and investments in technology to automate certain aspects of our business. We remain committed to putting our people first to ensure that they are well positioned to execute our daily operations diligently and safely. We remain focused on delivering outstanding customer service, managing our variable costs with changing volumes and investing in technology that will enhance our customers’ experience and provide operating efficiencies intended to reduce our cost to serve.
Current Year Financial Results
During 2024, we continued to focus on our priorities to advance our strategy—enhancing employee engagement, reducing our cost to serve through the use of technology and automation, and investing in growth through acquisitions and our Recycling Processing and Sales and WM Renewable Energy segments. We invested approximately $8 billion, with $7.5 billion funded in cash and $0.5 billion as the assumption of debt, on acquisitions in 2024, including having completed our acquisition of Stericycle in early November. We remain diligent in offering competitive and differentiated services that meet the needs of our customers, and we are focused on driving operating efficiencies and reducing discretionary spend. We continue to invest in our people through paying a competitive market wage, investing in our digital platform and providing training for our team members. We also continue to make investments in automation and optimization to enhance our operational efficiency and improve labor productivity for all lines of business. This strategic focus, combined with strong operational execution, resulted in increased revenue, income from operations and income from operations margin in 2024 when compared to the prior year. During 2024, the Company allocated $3,231 million of available cash to capital expenditures. We also allocated $1,472 million of available cash to our shareholders during 2024 through dividends and common stock repurchases.
50Table of ContentsKey elements of our 2024 financial results include:
● Revenues of $22,063 million for 2024 compared with $20,426 million in 2023, an increase of $1,637 million, or 8.0%. The increase is primarily attributable to (i) higher yield in our Collection and Disposal businesses; (ii) acquisitions, net of divestitures; (iii) increases in commodity prices in our Recycling and Sales and WM Renewable Energy segments and (iv) increased volumes. These increases were partially offset by a decrease in revenue from our energy surcharge program as a result of a decline in the price of fuel, particularly diesel;
● Operating expenses of $13,383 million in 2024, or 60.7% of revenues, compared with $12,606 million, or 61.7% of revenues, in 2023. As a percentage of revenue, operating expenses improved significantly compared to the prior year as revenue growth from price, efficiency gains, improved employee retention and momentum in truck deliveries offset the impacts of inflationary increases in wages and other expenses. The increase in total operating expenses from prior year related primarily to (i) acquisitions; (ii) inflationary pressure on wages and expenses; (iii) higher recycling customer rebates resulting from an approximate 50% increase in single-stream recycling commodity prices; (iv) volume growth within our WMSBS business which relies more extensively on subcontracted hauling and services than our Collection and Disposal businesses; (v) increases in landfill operating costs, particularly for higher leachate costs due to wet weather and (vi) higher risk management spend, due in part, to increases in certain large loss claims reserves. These increases were partially offset by lower diesel fuel prices and an increase in gains on the sale of non-strategic assets in 2024 as compared with the prior year;
● Selling, general and administrative expenses of $2,264 million in 2024, or 10.3% of revenues, compared with $1,926 million, or 9.4% of revenues, in 2023. The $338 million increase was primarily due to (i) costs incurred in connection with the acquisition and integration of Stericycle of which a significant portion were transaction and integration costs that are not expected to recur; (ii) increased labor costs from higher annual and long-term incentive compensation costs and annual wage increases and (iii) increased professional fees to support strategic initiatives. Partially offsetting these increases was a decline in litigation costs;
● Income from operations of $4,063 million, or 18.4% of revenues, in 2024 compared with $3,575 million, or 17.5% of revenues, in 2023. The increase in the current year earnings was primarily driven by (i) revenue growth and improved performance within our Collection and Disposal businesses; (ii) impairments incurred in 2023 and (iii) higher RIN quantities generated and sold at higher market values in the current year;
● Net income attributable to Waste Management, Inc. was $2,746 million, or $6.81 per diluted share, compared with $2,304 million, or $5.66 per diluted share, in 2023. The $442 million increase is due to an increase in income from operations discussed above, as well as lower income tax expense driven by benefits generated from our low-income housing investments and federal tax credits realized from our RNG investments. These increases were partially offset by higher interest expense;
● Net cash provided by operating activities was $5,390 million in 2024, compared with $4,719 million in 2023. The $671 million increase in net cash provided by operating activities was primarily driven by (i) higher earnings in our Collection and Disposal businesses; (ii) favorable changes in working capital, net of effects of acquisitions and divestitures and (iii) lower annual incentive compensation payments. This increase was partially offset by higher cash interest payments and income tax payments; and
● Free cash flow was $2,317 million in 2024, compared with $1,902 million in 2023. The $415 million increase in free cash flow was primarily due to the increases in operating cash described above and increase in proceeds from the divestiture of non-strategic assets and businesses. These increases were partially offset by an increase in capital spending, which was driven by our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments and higher capital asset purchases in the current year to support our Collection and Disposal businesses. Free cash flow is a non-GAAP measure of liquidity. Refer to Free Cash Flow below for our definition of free cash flow, additional information about our use of this measure, and a reconciliation to net cash provided by operating activities, which is the most comparable GAAP measure.
51Table of Contents
Results of Operations
Operating Revenues
The mix of operating revenues for the years ended December 31 are as follows (in millions):
Net
Intercompany
Gross
Operating
Operating
Operating
RevenuesRevenues(a)(b)
Revenues(b)Year Ended December 31:
2024
Commercial
$5,371
$798
$6,169Industrial
3,089
7943,883Residential
3,466
89
3,555Other collection
2,9642303,194Total collection
14,8901,91116,801Landfill
3,445
1,513
4,958Transfer
1,381
1,067
2,448Total Collection and Disposal
19,7164,49124,207Recycling Processing and Sales
1,6032871,890
WM Renewable Energy318
3
321
WM Healthcare Solutions
403
10
413Corporate and Other
23
25
48Total
$22,063
$4,816
$26,879
2023
Commercial
$5,109
$692
$5,801Industrial
3,083
7533,836Residential
3,378
96
3,474Other collection
2,7862203,006Total collection
14,3561,76116,117Landfill
3,252
1,479
4,731Transfer
1,257
1,036
2,293Total Collection and Disposal
18,8654,27623,141Recycling Processing and Sales
1,2643121,576
WM Renewable Energy273
3
276
Corporate and Other
2422
46
Total
$
20,426
$
4,613
$
25,039
2022
Commercial
$
4,860
$
590
$
5,450
Industrial
3,025
656
3,681
Residential
3,264
75
3,339
Other collection
2,466
217
2,683
Total collection
13,615
1,538
15,153
Landfill
3,062
1,454
4,516
Transfer
1,166
977
2,143
Total Collection and Disposal
17,843
3,969
21,812
Recycling Processing and Sales
1,516
244
1,760
WM Renewable Energy
312
3
315Corporate and Other
27
22
49Total
$19,698
$4,238
$23,936
52Table of Contents(a) Intercompany operating revenues reflect each segment’s total intercompany sales, including intercompany sales within a segment and between segments. Transactions within and between segments are generally made on a basis intended to reflect the market value of the service.
(b) In the fourth quarter of 2024, the Company adjusted gross and intercompany operating revenues to reflect the 15% royalty paid by WM Renewable Energy to Collection and Disposal and Corporate and Other businesses for the purchase of landfill gas. There was no change to net operating revenues. Prior periods were recast to conform to current year presentation.The following table provides details associated with the period-to-period change in revenues and average yield for the year ended December 31 (dollars in millions):
2024 vs. 2023
2023 vs. 2022
As a % of
As a % of
As a % of
As a % of
Related
Total
Related
Total
AmountBusiness(a)Amount
Company(b)
AmountBusiness(a)
AmountCompany(b)
Collection and disposal
$8114.5%
$
9115.4
%
Recycling Processing and Sales and WM Renewable Energy (c)
271
17.1
(381)
(20.2)
Energy surcharge and mandated fees
(97)(9.9)
(104)
(9.7)
Total average yield (d)
$9854.8%
$
426
2.1
%Volume (e)
880.4
1500.8
Internal revenue growth
1,0735.2
576
2.9
Acquisitions
5842.9
186
0.9
Divestitures
(8)—
(5)
—
Foreign currency translation
(12)
(0.1)
(29)
(0.1)
Total
$1,6378.0%
$
728
3.7
%
(a) Calculated by dividing the increase or decrease for the current year by the prior year’s related business revenue adjusted to exclude the impacts of divestitures for the current year.
(b) Calculated by dividing the increase or decrease for the current year by the prior year’s total Company revenue adjusted to exclude the impacts of divestitures for the current year.
(c) Includes combined impact of commodity price variability in both our Recycling Processing and Sales and WM Renewable Energy segments, as well as changes in certain recycling fees charged by our collection and disposal operations.
(d) The amounts reported herein represent the changes in our revenue attributable to average yield for the total Company.(e) Includes activities from our Corporate and Other businesses.The following provides further details about our period-to-period change in revenues:
Average YieldCollection and Disposal Average Yield — This measure reflects the effect on our revenue from the pricing activities of our collection, transfer and landfill operations, exclusive of volume changes. Revenue growth from Collection and Disposal average yield includes not only base rate changes and environmental and service fee fluctuations, but also (i) certain average price changes related to the overall mix of services, which are due to the types of services provided; (ii) changes in average price from new and lost business and (iii) price decreases to retain customers.
53Table of Contents
The details of our revenue growth from Collection and Disposal average yield for the year ended December 31 are as follows (dollars in millions):
2024 vs. 2023
2023 vs. 2022
As a % of
As a % of
Related
Related
AmountBusinessAmount
BusinessCommercial
$3276.2%$
321
6.5
%Industrial
1765.0240
7.2
Residential
2006.2191
6.1
Total collection
7035.6752
6.3
Landfill
541.876
2.7
Transfer
544.583
7.5
Total Collection and Disposal
$8114.5%$
9115.4
%
Our overall pricing efforts are focused on keeping pace with the increasing costs and capital intensity of our business. We are continuing to see growth in our landfill business with our municipal solid waste experiencing average yield of 3.1% in 2024.
Recycling Processing and Sales and WM Renewable Energy — Recycling Processing and Sales revenues attributable to yield increased $245 million in 2024 and decreased $308 million in 2023, respectively, as compared with the prior year periods. Average market prices for single-stream recycled commodities increased approximately 50% in 2024 and decreased 40% in 2023 as compared with the prior year period. During 2023, the revenue decline from lower commodity pricing that started in 2022 was partially offset by higher pricing in our recycling brokerage business as well as our continued focus on a fee-based pricing model. Additionally, revenue in our WM Renewable Energy segment increased $26 million in 2024 and decreased $73 million in 2023 as compared with the prior year periods, primarily driven by fluctuations in energy prices and the value and quantity of RINs. While there may be short-term fluctuations in our commodity-driven businesses as prices change, we believe that our business models and processes appropriately mitigate the downside risk of changes in commodity prices.
Energy Surcharge and Mandated Fees — These fees decreased $97 million and $104 million in 2024 and 2023, respectively, as compared to the prior year periods. Beginning in the second quarter of 2023, our energy surcharge was revised to incorporate market prices for both diesel and CNG. The decrease in energy surcharge revenues is primarily due to a decline in market prices for diesel fuel of approximately 10% in 2024 and 15% in 2023 as compared to the prior year periods. The mandated fees are primarily related to fees and taxes assessed by various state, county and municipal government agencies at our landfills and transfer stations. These amounts have not significantly impacted the change in revenue for the periods presented.VolumeOur revenues from volume (excluding volumes from acquisitions and divestitures) increased $88 million, or 0.4%, and $150 million, or 0.8%, in 2024 and 2023, respectively, as compared with the prior year periods. Although our 2024 volume growth has moderated when compared to 2023, special waste and municipal solid waste tons at our landfills continue to be a significant driver of our growth. Additionally, in 2024 we saw an increase in volumes in our WMSBS business due to our continued focus on a differentiated service model for national accounts customers and our recycling activity, renewable energy projects and commercial collection business contributed to our overall volume growth. These increases were partially offset by a decrease in industrial collection volumes and the intentional shedding of low-margin residential collection business. Furthermore, our construction and demolition landfill volumes for the year ended December 31, 2024, declined as compared to prior year due to clean-up efforts in our East Tier from Hurricane Ian in 2023.
54
Table of ContentsAcquisitions and DivestituresAcquisitions and divestitures resulted in a net increase in revenues of $576 million, or 2.9%, and $181 million, or 0.9%, in 2024 and 2023, respectively, as compared to the prior year periods. The 2024 increase was primarily due to our acquisition of Stericycle in November 2024. The remaining increases were related to our ongoing investment in tuck-in acquisitions of solid waste businesses.Operating ExpensesOur operating expenses are comprised of (i) labor and related benefits costs (excluding labor costs associated with maintenance and repairs discussed below), which include salaries and wages, bonuses, related payroll taxes, insurance and benefits costs and the costs associated with contract labor; (ii) transfer and disposal costs, which include tipping fees paid to third-party disposal facilities and transfer stations; (iii) maintenance and repairs costs relating to equipment, vehicles and facilities and related labor costs; (iv) subcontractor costs, which include the costs of independent haulers who transport waste collected by us to disposal facilities and are affected by variables such as volumes, distance and fuel prices; (v) costs of goods sold, which includes the cost to purchase recycling materials for our Recycling Processing and Sales segment, including certain rebates paid to suppliers; (vi) fuel costs, net of tax credits for alternative fuel, which represent the costs of fuel to operate our truck fleet and landfill operating equipment; (vii) disposal and franchise fees and taxes, which include landfill taxes, municipal franchise fees, host community fees, contingent landfill lease payments and royalties; (viii) landfill operating costs, which include interest accretion on landfill liabilities, interest accretion on and discount rate adjustments to environmental remediation liabilities, leachate and methane collection and treatment, landfill remediation costs and other landfill site costs; (ix) risk management costs, which include general liability, automobile liability and workers’ compensation claims programs costs and (x) other operating costs, which include gains and losses on sale of assets, telecommunications, equipment and facility lease expenses, property taxes, utilities and supplies. Variations in volumes year-over-year, as discussed above in Operating Revenues , in addition to cost inflation, affect the comparability of the components of our operating expenses.The following table summarizes the major components of our operating expenses for the year ended December 31 (dollars in millions and as a percentage of revenues):
2024
2023
2022
Labor and related benefits
$3,845
17.4%
$3,669
18.0%
$
3,452
17.5
%Transfer and disposal costs
1,3316.0
1,2736.21,2156.2Maintenance and repairs
2,079
9.4
1,9789.7
1,835
9.3
Subcontractor costs
2,240
10.2
2,18510.7
2,006
10.2
Cost of goods sold
1,048
4.7
7693.8
973
4.9
Fuel
437
2.0
5012.4
592
3.0
Disposal and franchise fees and taxes
744
3.4
7363.6
720
3.7
Landfill operating costs
524
2.4
4532.2
421
2.1
Risk management
351
1.6
3201.6
348
1.8
Other
784
3.6
7223.5732
3.7
$
13,383
60.7
%
$
12,606
61.7
%
$
12,294
62.4
%
As a percentage of revenue, operating expenses improved significantly compared to the prior year as revenue growth from price, efficiency gains, improved employee retention and momentum in truck deliveries offset the impacts of inflationary increases in wages and other expenses. The increase in total operating expenses from prior year related primarily to (i) acquisitions; (ii) inflationary pressure on wages and expenses; (iii) higher recycling customer rebates resulting from an approximate 50% increase in single-stream recycling commodity prices; (iv) volume growth within our WMSBS business which relies more extensively on subcontracted hauling and services than our Collection and Disposal businesses; (v) increases in landfill operating costs due to wet weather and (vi) higher risk management spend, due in part, to increases in certain large loss claims reserves. These increases were partially offset by lower diesel fuel prices and an increase in gains on the sale of non-strategic assets in 2024 as compared with the prior year.
Our operating expenses increased in 2023, as compared with 2022, primarily due to (i) inflationary cost pressures,
55
Table of Contents
particularly for maintenance and repairs and subcontractor costs and (ii) labor cost pressure from frontline employee market wage adjustments. These increases were offset, in part, by commodity-driven business impacts, particularly from lower recycling rebates reflected in costs of goods sold and lower fuel prices. Our focus on operating efficiency and efforts to control our costs, along with revenue growth, enabled us to improve operating costs as a percent of revenues in 2023 as compared with 2022.Significant items affecting the comparison of operating expenses between reported periods include:Labor and Related Benefits — Our investments in technology that focus on driving route optimization, improving driver retention, and creating efficiencies have positively impacted our labor and related benefits costs. The increase in costs in 2024, as compared with 2023, was primarily driven by (i) increased headcount from our recent acquisitions and (ii) annual employee wage increases and higher annual incentive compensation. These increases were offset, in part, by the benefit of productivity and operational efficiency gains. The increase in labor and related benefits costs in 2023, as compared with 2022, was primarily driven by (i) employee market wage adjustments; (ii) increased headcount primarily from acquisitions and (iii) increases in health and welfare costs and in medical care activity. These increases were offset, in part, by lower annual incentive compensation.
Transfer and Disposal Costs — The increase in transfer and disposal costs in 2024, as compared with 2023, was primarily due to (i) inflationary cost increases, which includes increased disposal fees at third-party sites and higher rates from our third-party haulers and (ii) incremental third-party transfer and disposal costs as a result of our recent acquisitions. These cost increases were offset, in part, by decreases in industrial and residential collection volumes. The increase in transfer and disposal costs in 2023, as compared with 2022, was primarily due to inflationary cost increases, which includes increased disposal fees at third-party sites and higher rates from our third-party haulers, offset, in part, by a decrease in collection volumes.
Maintenance and Repairs — The increase in maintenance and repairs costs in 2024, as compared with 2023, was primarily driven by (i) inflationary and acquisition related cost increases for parts, supplies and third-party services, and (ii) annual wage increases and higher technician headcount. These cost increases were offset, in part, by an improvement in new truck deliveries, which require less maintenance than older trucks, (ii) fleet rationalization efforts that removed older trucks and reduced our fleet count and (iii) improvements in operational efficiencies. The increase in maintenance and repairs costs in 2023, as compared with 2022, was primarily driven by (i) continued inflationary cost increases for parts, supplies and third-party services, although the impact of such inflationary cost increases moderated throughout the year and (ii) labor cost increases for our technicians, including additional headcount.
Subcontractor Costs — The increase in subcontractor costs in 2024, as compared with 2023, was primarily due to (i) an increase in volumes in our WMSBS business, which relies more extensively on subcontracted hauling and services than our Collection and Disposal businesses (ii) continued inflationary cost increases related to labor costs from third-party haulers and (iii) our recent acquisitions. These increases were offset, in part, by the impact of lower fuel prices on third-party subcontracted hauling and services. The increase in subcontractor costs in 2023, as compared with 2022, was primarily due to (i) an increase in volumes in our WMSBS and SES businesses, which rely more extensively on subcontracted hauling and services than other parts of our Collection and Disposal businesses and (ii) continued inflationary cost increases, particularly labor and other costs from third-party haulers.
Cost of Goods Sold — The increase in cost of goods sold in 2024, as compared with 2023, was primarily driven by an approximate 50% increase in single-stream recycling commodity prices. The decrease in cost of goods sold in 2023, as compared with 2022, was primarily driven by a 40% decrease in average single-stream recycling commodity prices.
Fuel — The decrease in fuel costs was primarily due to a decrease of approximately 10% in average market prices for diesel fuel in 2024 and 15% in 2023.
Disposal and Franchise Fees and Taxes — The increase in disposal and franchise fees and taxes in 2024, as compared with 2023, was primarily driven by an increase in landfill volumes and an overall rate increase in fees and taxes paid to municipalities on our disposal volumes. The increase in disposal and franchise fees and taxes in 2023, as compared with 2022, was primarily driven by an overall rate increase in fees and taxes paid to municipalities on our disposal volumes.
56Table of ContentsLandfill Operating Costs — The increase in landfill operating costs in 2024, as compared with 2023, was primarily due to (i) higher leachate collection and treatment and site maintenance costs which can largely be attributed to particularly wet weather in certain markets throughout 2024 and (ii) increased methane collection and treatment costs. Our landfill operating costs increased in 2023, as compared with 2022, primarily due to (i) higher expenses for interest accretion on landfill and environmental remediation liabilities and (ii) an increase in remediation expense due to changes in measurement of certain environmental remediation obligations.Risk Management — The increase in risk management in 2024, as compared with 2023, was primarily due to (i) adjustments to our reserves for certain large loss claims; (ii) higher auto and workers compensation claims costs and (iii) increases in premiums for property coverage. These increases were offset, in part, by current year insurance recoveries for property claims associated with a fire and natural disasters. Risk management costs decreased in 2023, as compared with 2022, primarily due to lower levels of large loss claims.Other — Other operating costs increased in 2024, as compared with 2023, primarily due to (i) our recent acquisitions (ii) higher supply chain rebates in 2023 and (iii) a prior year favorable litigation settlement, which reduced our expenses in that period. These increases were offset, in part, by gains on the sales of non-strategic assets in 2024. Other operating costs decreased in 2023, as compared with 2022, primarily due to (i) supply chain rebates in 2023 and (ii) a favorable litigation settlement, which were offset, in part, by (i) inflationary cost pressures, although the impact of such continued inflationary cost increases moderated throughout the year; (ii) higher utility costs at our facilities; (iii) an increase in business travel and (iv) higher equipment rental costs.Selling, General and Administrative Expenses
Our selling, general and administrative expenses consist of (i) labor and related benefits costs, which include salaries, bonuses, related insurance and benefits, contract labor, payroll taxes and equity-based compensation; (ii) professional fees, which include fees for consulting, legal, audit and tax services; (iii) provision for bad debts, which includes allowances for uncollectible customer accounts and collection fees and (iv) other selling, general and administrative expenses, which include, among other costs, facility-related expenses, voice and data telecommunication, advertising, bank charges, computer costs, travel and entertainment, rentals, postage and printing. In addition, the financial impacts of litigation reserves generally are included in our “Other” selling, general and administrative expenses.
The following table summarizes the major components of our selling, general and administrative expenses for the year ended December 31 (dollars in millions and as a percentage of revenues):
2024
2023
2022
Labor and related benefits
$1,400
6.4%
$1,205
5.9%
$
1,195
6.1
%Professional fees
358
1.6
2281.12681.4Provision for bad debts
51
0.2
560.3
50
0.2
Other
455
2.1
4372.1425
2.1
$
2,264
10.3
%
$
1,9269.4
%
$
1,938
9.8
%
Selling, general and administrative expenses in 2024, as compared with 2023, have increased due to (i) severance and consulting costs incurred in connection with the acquisition and integration of Stericycle, of which a significant portion are transaction and integration costs that are not expected to recur; (ii) increased labor costs from higher annual and long-term incentive compensation and annual wage increases and (iii) increased professional fees to support strategic initiatives. Partially offsetting these increases was a decline in litigation costs.
Selling, general and administrative expenses in 2023, as compared with 2022, decreased primarily due to (i) reduced professional fees in connection with investments in our digital platform, as certain digital projects have moved from higher cost development activities to implementation activities, and (ii) lower annual incentive compensation costs. These decreases were partially offset by annual wage increases and increased litigation costs.
57Table of Contents
Significant items affecting the comparison of our selling, general and administrative expenses between reported periods include:Labor and Related Benefits — The increase in labor and related benefits costs in 2024, as compared with 2023, was primarily related to (i) costs incurred in connection with our acquisition of Stericycle, including severance costs and additional headcount; (ii) higher annual and long-term incentive compensation costs and (iii) annual employee wage increases. The increase in labor and related benefits costs in 2023, as compared with 2022, was primarily related to (i) annual wage increases for our employees; (ii) market adjustments for deferred compensation plans related to investment performance and (iii) higher long-term incentive compensation costs, partially offset by lower annual incentive compensation costs and lower contract labor expenses.
Professional Fees — The increase in professional fees in 2024, as compared with 2023, was primarily attributable to legal, consulting and accounting costs incurred to support strategic initiatives, including our acquisition of Stericycle. The decrease in professional fees in 2023, as compared with 2022, was primarily attributable to reduced expenses in connection with investments in our digital platform.
Other — The increase in other expenses in 2024, as compared with 2023, was primarily related to (i) risk management costs incurred in connection with the acquisition and integration of Stericycle and (ii) increased spend across multiple cost categories including technology and travel. These cost increases were partially offset by a decline in litigation costs. The increase in other expenses in 2023, as compared with 2022, was primarily related to (i) increased litigation costs; (ii) increased bank charges and (iii) higher advertising spend, which were partially offset by lower travel expenses and lower telecommunication costs.Depreciation, Depletion and Amortization Expenses
The following table summarizes the components of our depreciation, depletion and amortization expenses for the year ended December 31 (dollars in millions and as a percentage of revenues):
2024
2023
2022Depreciation of tangible property and equipment
$1,292
5.9%
$1,1975.9
%
$
1,155
5.9
%Depletion of landfill airspace
795
3.6
745
3.6
7543.8Amortization of intangible assets
180
0.8
1290.6
129
0.6
$2,26710.3%
$2,07110.1
%
$
2,038
10.3
%
The increase in depreciation of tangible property and equipment in 2024, as compared with 2023, was driven by (i) increased investments in capital assets such as trucks and containers and (ii) the acquisition of Stericycle. The increase in depletion of landfill airspace in 2024, as compared to with 2023, was driven by changes in amortization rates from revisions in landfill estimates and volume increases, partially offset by the closure of a landfill in our East Tier. The increase in amortization of intangibles was driven by the amortization of acquired intangible assets.
The increase in depreciation of tangible property and equipment in 2023, as compared with 2022, was mainly influenced by strategic investments in our digital platform and investments in capital assets to service our customers, such as machinery and containers. The decrease in depletion of landfill airspace in 2023, as compared with 2022, was primarily driven by reductions in volume partially offset by the reopening of a previously closed site in our East Tier.
58
Table of Contents(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net
The following table summarizes the major components of (gain) loss from divestitures, asset impairments and unusual items, net for the year ended December 31 (in millions):
20242023
2022Gain from divestitures, net
$(26)
$—
$(5)Asset impairments
90275
50Other, net
18
(32)17$
82
$
243
$
62
During the year ended December 31, 2024, we recognized $82 million of net charges primarily consisting of (i) a $54 million charge required to increase the estimated fair value of a liability associated with the expected disposition of an investment the Company holds in a waste diversion technology business; (ii) a $14 million loss associated with the divestiture of a minority investment in a medical waste company within Corporate and Other, in connection with our acquisition of Stericycle and (iii) a $13 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site, as discussed in Note 10 to the Consolidated Financial Statements for further information.
During the year ended December 31, 2023, we recognized $243 million of net charges primarily consisting of (i) a $168 million goodwill impairment charge within our Recycling Processing and Sales segment related to a business engaged in accelerating film and plastic wrap recycling capabilities, with $22 million attributable to noncontrolling interests. This charge was partially offset by the recognition of $46 million of income related to the reversal of a liability for contingent consideration associated with our investment in such business; (ii) $107 million of impairment charges within Corporate and Other for certain investments in waste diversion technology businesses and (iii) a $17 million charge within Corporate and Other to adjust an indirect wholly owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site. Refer to Notes 5 and 10 to the Consolidated Financial Statements for further information.
During the year ended December 31, 2022, we recognized $62 million of net charges consisting of (i) $50 million of asset impairment charges primarily related to management’s decision to close two landfills within our East Tier and (ii) a $17 million charge pertaining to reserves for loss contingencies within Corporate and Other to adjust an indirect wholly owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site, as discussed in Note 10 to the Consolidated Financial Statements. These losses were partially offset by a $5 million gain from the divestiture of a collection and disposal operation in our West Tier.
See Note 2 to the Consolidated Financial Statements for additional information related to the accounting policy and analysis involved in identifying and calculating impairments. See Note 19 to the Consolidated Financial Statements for additional information related to the impact of impairments on the results of operations of our reportable segments.
59Table of ContentsIncome from Operations
The following table summarizes income from operations for the year ended December 31 (dollars in millions):
Period-to-
Period-to-
Period
Period
2024Change2023
Change
2022
Collection and Disposal:
East Tier
$2,760
$314
12.8
%$2,446
$
268
12.3%$
2,178
West Tier
2,693
31013.02,383
201
9.2
2,182
Other Ancillary
(9)(1)*
(8)
(8)
*
—
Collection and Disposal
5,444623
12.94,821461
10.64,360Recycling Processing and Sales
86
130
*
(44)
(172)
*
128
WM Renewable Energy
9920
25.379(53)
(40.2)132WM Healthcare Solutions
(69)
(69)
*
—
—
*
—
Corporate and Other
(1,497)
(216)16.9
(1,281)
(26)
2.1
(1,255)
Total
$4,063
$488
13.7
%$3,575
$
210
6.2%$
3,365
Percentage of revenues
18.4%
17.5%
17.1
%* Percentage change does not provide a meaningful comparison.Collection and Disposal — The most significant items affecting the results of operations of our Collection and Disposal businesses during the three years ended December 31, 2024 are summarized below:
● Income from operations in our Collection and Disposal businesses increased in 2024, as compared with 2023, primarily due to (i) our focus on pricing our services to keep pace with inflationary cost pressures, alongside intentional efforts to improve efficiency and operating costs incurred to serve our customers; (ii) contributions from higher landfill volumes generated from special waste and municipal solid waste and (iii) gains on the sales of non-strategic assets. These increases were partially offset by (i) a decline in contributions from lower industrial volumes; (ii) an increase in landfill operating costs and (iii) increased depreciation expenses with relation to our fleet, machinery and equipment as well as higher depletion costs at our landfills .
● Income from operations in our Collection and Disposal businesses increased in 2023, as compared with 2022, primarily due to revenue growth in our collection and disposal operations driven by both yield and volume. This increase was partially offset by (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor costs and (ii) labor cost pressure from frontline employee market wage adjustments.
Recycling Processing and Sales — Income from operations in our Recycling Processing and Sales segment increased in 2024, as compared with 2023, primarily due to (i) net charges of $122 million recognized in 2023 related to a goodwill impairment and reversal of contingent consideration, as discussed below and (ii) benefits from the automation of our recycling facilities as well as investments in new facilities and cost management. These improvements were partially offset by the impact of higher costs incurred from the temporary shutdown of facilities for technology upgrades.
Income from operations in our Recycling Processing and Sales segment decreased in 2023, as compared with 2022, primarily due to (i) a $168 million goodwill impairment charge, with $22 million attributable to noncontrolling interests, which was partially offset by the recognition of $46 million of income related to the reversal of contingent consideration as discussed above in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net ; (ii) a decline in recycling commodity prices; (iii) lower revenue resulting from the temporary shutdown of facilities for technology upgrades combined with increased costs associated with the transportation and third-party tip fees for processing recyclables and (iv) startup costs linked to the establishment of a new processing facility.
WM Renewable Energy — Income from operations in our WM Renewable Energy segment increased in 2024, as compared with 2023, primarily due to (i) higher RIN quantities generated and sold at higher market values in the current year and (ii) increased beneficial use of landfill gas sold to third parties due to the completion of additional projects. Income from operations in our WM Renewable Energy segment decreased in 2023, as compared with 2022, primarily due to (i) lower energy prices and the value of RINs and (ii) increased operating and selling, general and administrative costs
60Table of Contentsassociated with the construction of new projects to increase the beneficial use of landfill gas. These decreases were partially offset by an increase in volume of RFS credits, electricity and natural gas.
WM Healthcare Solutions — Our WM Healthcare Solutions segment generated a loss of $69 million in 2024, which was largely attributable to acquisition and integration related expenses. There is no 2023 or 2022 activity as Stericycle was acquired on November 4, 2024.
Corporate and Other — The costs incurred by our Corporate and Other segment increased in 2024, as compared with 2023, primarily due to (i) increased professional and transaction fees to support strategic initiatives, including our acquisition of Stericycle; (ii) higher annual and long-term incentive compensation costs and (iii) an increase in risk management costs due to an increase in our large loss reserves as well as higher auto and workers compensation claims. This increase was partially offset by the impact of non-cash impairment charges for certain investments incurred in 2023, as discussed below.
Income from operations in Corporate and Other decreased in 2023, as compared with 2022, primarily due to impairment charges of (i) $107 million for certain investments in waste diversion technology businesses and (ii) $17 million to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site.Interest Expense, NetOur interest expense, net was $598 million, $500 million and $378 million in 2024, 2023 and 2022, respectively. The increase in interest expense, net for 2024 is primarily related to an increase in our average debt balances to fund our acquisition of Stericycle. The increase in interest expense, net for 2023 is primarily related to an increase in our weighted average borrowing rate of approximately 80 basis points due to increased rates on floating-rate debt and higher fixed rates on refinancing as well as an increase in average debt balances to fund growth. Partially offsetting these increases were benefits from higher capitalized interest and increases in interest income as a result of higher cash and cash equivalent balances as well as higher investment rates. See Note 6 to the Consolidated Financial Statements for more information related to our debt balances.
Loss on Early Extinguishment of Debt, Net
In October 2024, we drew $5.2 billion of borrowings under the Term Credit Agreement that were applied to funding our acquisition of Stericycle. In November 2024, we repaid all outstanding borrowings with net proceeds from our November 2024 issuance of $5.2 billion of senior notes and contemporaneously terminated the Term Credit Agreement, resulting in a $7 million loss on early extinguishment of debt.
Equity in Net Income (Losses) of Unconsolidated Entities
We recognized equity method investment income of $4 million in 2024 and losses of $60 million and $67 million in 2023 and 2022, respectively. These financial statement impacts are largely related to our noncontrolling interests in entities established to invest in and manage low-income housing properties. In 2024, we adopted Accounting Standards Update (“ASU”) 2023-02, and, as a result, beginning in 2024, the amortization of these investments is recognized as a component of income tax expense. Refer to Notes 2 and 8 to the Consolidated Financial Statements for further discussion. We generate tax benefits, including tax credits, from the losses incurred from these investments. The losses are more than offset by the tax benefits generated by these investments as further discussed in Notes 8 and 18 to the Consolidated Financial Statements.Income Tax ExpenseWe recorded income tax expense of $713 million, $745 million and $678 million in 2024, 2023 and 2022, respectively, resulting in effective income tax rates of 20.6%, 24.7% and 23.2% for the years ended December 31, 2024, 2023 and 2022, respectively. The comparability of our income tax expense for the reported periods has been primarily affected by the following:
61Table of Contents● Renewable Natural Gas — Through our subsidiaries, including our WM Renewable Energy segment, we have invested in building landfill gas-to-energy facilities in the U.S. and Canada that produce renewable electricity and RNG. We expect our new RNG facilities to qualify for federal tax credits and to realize those credits through 2027 under Sections 48 and 45Z of the Internal Revenue Code. We completed construction of five RNG facilities in 2024 and one RNG facility in 2023, resulting in a reduction to our income tax expense of $137 million and $8 million, respectively, for investment tax credits under Section 48 (additional information related to these tax credits is included below under the Tax Legislation section);
● Low-Income Housing — As a result of adopting ASU 2023-02, we amortize our investments in these entities using the proportional amortization method. Under the proportional amortization method, the equity investment is amortized in proportion to the income tax credits and other income tax benefits received. The amortization expense and the income tax credits are required to be presented on a net basis in income tax expense on the Consolidated Statements of Operations. Prior to fiscal year 2024, we accounted for our investments in these entities using the equity method of accounting, recognizing our share of each entity’s results of operations and other reductions in the value of our investments in equity in net income (losses) of unconsolidated entities, within our Consolidated Statements of Operations. W e recognized additional income tax expense of $78 million in 2024, related to amortization under ASU 2023-02. We recognized net losses of $66 million and $65 million in 2023 and 2022, respectively, and a reduction in our income tax expense of $104 million, $108 million and $99 million in 2024, 2023, and 2022, respectively, primarily due to federal tax credits realized from these investments as well as the tax benefits from the pre-tax losses realized. See Notes 2, 8, and 18 to the Consolidated Financial Statements for additional information related to these unconsolidated variable interest entities;
● Tax Implications of Impairments — During the years ended December 31, 2024 and 2023, we recognized additional income tax expense of $14 million and $50 million, respectively, due to non-cash impairment charges that were not deductible for tax purposes in the year of impairment. The non-cash impairment charge recognized during 2022 was deductible for tax purposes. See Note 11 to the Consolidated Financial Statements for more information related to our impairment charges; and
● Tax Legislation — The Inflation Reduction Act of 2022 (“IRA”) contains several tax-related provisions, including with respect to (i) alternative fuel tax credits; (ii) tax incentives for investments in renewable energy production, carbon capture, and other climate actions and (iii) the overall measurement of corporate income taxes. Given the complexity and uncertainty around the applicability of the legislation to our specific facts and circumstances, we continue to analyze the IRA provisions to identify and quantify potential opportunities and applicable benefits included in the legislation. The provisions of the IRA related to alternative fuel tax credits secure approximately $60 million of annual pre-tax benefit (recorded as a reduction in our operating expense) from tax credits in 2023 and 2024. The alternative fuel credit expired at the end of 2024 and will not provide any future benefit to the Company absent further legislative action. With respect to the investment tax credit, we expect the cumulative benefit to be between $300 million and $400 million, a large portion of which is anticipated to be realized in 2024 through 2026. The expected benefit from the investment tax credit for 2025 and 2026 is dependent on a number of estimates and assumptions, including the timing of project completion. Finally, we expect that the production tax credit incentives for investments in renewable energy and carbon capture, as expanded by the IRA, will likely result in an incremental benefit to the Company, although at this time, the anticipated amount of such benefit has not been quantified due, in part, to the lack of regulatory guidance.See Note 8 to the Consolidated Financial Statements for more information related to income taxes.62
Table of ContentsLandfill and Environmental Remediation Discussion and AnalysisWe owned or operated 257 solid waste landfills and five secure hazardous waste landfills as of December 31, 2024 and 258 solid waste landfills and five secure hazardous waste landfills as of December 31, 2023. For these landfills, the following table reflects changes in capacity, as measured in tons of waste, for the year ended December 31 and remaining airspace, measured in cubic yards of waste, as of December 31 (in millions):
2024
2023Remaining
Remaining
Permitted
Expansion
Total
Permitted
Expansion
Total
Capacity
Capacity
Capacity
Capacity
Capacity
Capacity
Balance as of beginning of year (in tons)
5,2111615,3725,1651905,355Acquisitions, divestitures, newly permitted landfills and closures—8
8—
—
—Changes in expansions pursued (a)
—58
58—
138
138Expansion permits granted (b)64
(64)
—168
(168)
—Depletable tons received(125)—(125)(123)—(123)Changes in engineering estimates and other (c)24
2
261
1
2Balance as of end of year (in tons) (d)5,174
165
5,3395,211
161
5,372Balance as of end of year (in cubic yards) (d)5,049
165
5,2145,079
180
5,259(a) Amounts reflected here relate to the combined impacts of (i) new expansions pursued; (ii) increases or decreases in the airspace being pursued for ongoing expansion efforts; (iii) adjustments for differences between the airspace being pursued and airspace granted and (iv) decreases due to decisions to no longer pursue expansion permits, if any.(b) We received expansion permits at 11 of our landfills during 2024 and 13 of our landfills during 2023, demonstrating our continued success in working with municipalities and regulatory agencies to expand the disposal airspace of our existing landfills.(c) Changes in engineering estimates can result in changes to the estimated available remaining airspace of a landfill or changes in the utilization of such landfill airspace, affecting the number of tons that can be placed in the future. Estimates of the amount of waste that can be placed in the future are reviewed annually by our engineers and are based on a number of factors, including standard engineering techniques and site-specific factors such as current and projected mix of waste type; initial and projected waste density; estimated number of years of life remaining; depth of underlying waste; anticipated access to moisture through precipitation or recirculation of landfill leachate and operating practices. We continually focus on improving the utilization of airspace through efforts that may include recirculating landfill leachate where allowed by permit; optimizing the placement of daily cover materials and increasing initial compaction through improved landfill equipment, operations and training.
(d) See Note 2 to the Consolidated Financial Statements for discussion of converting remaining cubic yards of airspace to tons of capacity.The depletable tons received at our landfills for the year ended December 31 are shown below (tons in thousands):
2024
2023
# ofDepletableTons per# ofDepletableTons per
SitesTonsDaySitesTonsDay
Solid waste landfills (a)257124,271
456258
122,141
450Hazardous waste landfills5
626
25
658
2262
124,897
458263
122,799
452
Solid waste landfills closed, divested or lease or other contractual agreement expired during related year
—113—
—125,010
122,799(a) As of December 31, 2024 and 2023, we had 15 and 17 landfills, respectively, which were not accepting waste.
63
Table of Contents
As of December 31, 2024, we owned or managed 239 sites that are either in closure or post-closure, have received a certification post-closure, or are regulated under a remedial action plan.
Based on remaining permitted airspace as of December 31, 2024 and projected annual disposal volume, the weighted average remaining landfill life for all of our owned or operated landfills is approximately 38 years. Many of our landfills have the potential for expanded airspace beyond what is currently permitted. We monitor the availability of permitted airspace at each of our landfills and evaluate whether to pursue an expansion at a given landfill based on estimated future disposal volume, disposal prices, construction and operating costs, remaining airspace and likelihood of obtaining an expansion permit. We are seeking expansion permits at 18 of our landfills that meet the expansion criteria outlined in the Critical Accounting Estimates and Assumptions — Landfills section below. Although no assurances can be made that all future expansions will be permitted or permitted as designed, the weighted average remaining landfill life for all owned or operated landfills is approximately 39 years when considering remaining permitted airspace, expansion airspace and projected annual disposal volume.
The number of landfills owned or operated as of December 31, 2024, segregated by their estimated operating lives based on remaining permitted and expansion airspace and projected annual disposal volume, was as follows:
# of Landfills
0 to 5 years28
6 to 10 years22
11 to 20 years53
21 to 40 years62
41+ years97
Total262(a)(a) Of the 262 landfills, 221 are owned, 29 are operated under lease agreements and 12 are operated under other contractual agreements. For the landfills not owned, we are usually responsible for final capping, closure and post-closure obligations.Landfill Assets — We capitalize various costs that we incur to prepare a landfill to accept waste. These costs generally include expenditures for land (including the landfill footprint and required landfill buffer property), permitting, excavation, liner material and installation, landfill leachate collection systems, landfill gas collection systems, environmental monitoring equipment for groundwater and landfill gas, directly related engineering, capitalized interest, and on-site road construction and other capital infrastructure costs. The cost basis of our landfill assets also includes estimates of future costs associated with landfill final capping, closure and post-closure activities, which are discussed further below.The changes to the cost basis of our landfill assets and accumulated landfill airspace depletion for the year ended December 31, 2024 are reflected in the table below (in millions):
Accumulated
Net Book
Cost Basis of
Landfill Airspace
Value of
Landfill AssetsDepletionLandfill AssetsDecember 31, 2023
$19,473
$(11,643)
$7,830Capital additions
832
—
832
Asset retirement obligations incurred and capitalized
91
—
91Depletion of landfill airspace
—
(795)(795)Foreign currency translation
(100)47(53)Asset retirements and other adjustments
(23)132109
December 31, 2024
$20,273
$(12,259)
$8,014As of December 31, 2024, we estimate that we will spend approximately $845 million in 2025, and approximately $1.8 billion in 2026 and 2027 combined, for the construction and development of our landfill assets. The specific timing
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of landfill capital spending is dependent on future events and spending estimates are subject to change due to fluctuations in landfill waste volumes, changes in environmental requirements and other factors impacting landfill operations.Landfill and Environmental Remediation Liabilities — As we accept waste at our landfills, we incur significant asset retirement obligations, which include liabilities associated with landfill final capping, closure and post-closure activities. These liabilities are accounted for in accordance with authoritative guidance on accounting for asset retirement obligations and are discussed in Note 2 to the Consolidated Financial Statements. We also have liabilities for the remediation of properties that have incurred environmental damage, which generally was caused by operations or for damage caused by conditions that existed before we acquired operations or a site. We recognize environmental remediation liabilities when we determine that the liability is probable and the cost for the likely remedy can be reasonably estimated.The changes to landfill and environmental remediation liabilities for the year ended December 31, 2024 are reflected in the table below (in millions):
Environmental
LandfillRemediationDecember 31, 2023
$2,853
$209Obligations incurred and capitalized
91—
Obligations settled
(136)
(23)Interest accretion
133—Revisions in estimates and interest rate assumptions121
36Acquisitions, divestitures and other adjustments
(5)—December 31, 2024
$3,057
$222
Landfill Operating Costs — The following table summarizes our landfill operating costs for the year ended December 31 (in millions):
20242023
2022Interest accretion on landfill and environmental remediation liabilities
$133
$130
$
112Leachate and methane collection and treatment
230196
193Landfill remediation costs and discount rate adjustments to environmental remediation liabilities and recovery assets
187
(2)Other landfill site costs
143120
118Total landfill operating costs
$524
$453$
421
Depletion of Landfill Airspace — Depletion of landfill airspace, which is included as a component of depreciation, depletion and amortization expenses, includes the following:
● the depletion of landfill capital costs, including (i) costs that have been incurred and capitalized and (ii) estimated future costs for landfill development and construction required to develop our landfills to their remaining permitted and expansion airspace; and
● the depletion of asset retirement costs arising from landfill final capping, closure and post-closure obligations, including (i) costs that have been incurred and capitalized and (ii) projected asset retirement costs.
Depletion expense is recorded on a units-of-consumption basis, applying cost as a rate per ton. The rate per ton is calculated by dividing each component of the depletable basis of a landfill (net of accumulated depletion) by the number of tons needed to fill the corresponding asset’s remaining permitted and expansion airspace. Landfill capital costs and closure and post-closure asset retirement costs are generally incurred to support the operation of the landfill over its entire operating life and are, therefore, depleted on a per-ton basis using a landfill’s total permitted and expansion airspace. Final capping asset retirement costs are related to a specific final capping event and are, therefore, depleted on a per-ton basis using each discrete final capping event’s estimated permitted and expansion airspace. Accordingly, each landfill has multiple per-ton depletion rates.65
Table of ContentsThe following table presents our landfill airspace depletion expense on a per-ton basis for the year ended December 31:
20242023
2022Depletion of landfill airspace (in millions)
$795
$745
$
754Tons received, net of redirected waste (in millions)
125123
125
Average landfill airspace depletion expense per ton
$6.36
$6.07$
6.05
Different per-ton depletion rates are applied at each of our 262 landfills, and per-ton depletion rates vary significantly from one landfill to another due to (i) inconsistencies that often exist in construction costs and provincial, state and local regulatory requirements for landfill development and landfill final capping, closure and post-closure activities and (ii) differences in the cost basis of landfills that we develop versus those that we acquire. Accordingly, our landfill airspace depletion expense measured on a per-ton basis can fluctuate due to changes in the mix of volumes we receive across the Company each year.Liquidity and Capital ResourcesThe Company consistently generates annual cash flow from operations that meets and exceeds our working capital needs, allows for payment of our dividends, investment in the business through capital expenditures and tuck-in acquisitions, and funding of strategic sustainability growth investments. We continually monitor our actual and forecasted cash flows, our liquidity and our capital resources, enabling us to plan for our present needs and fund unbudgeted business requirements that may arise during the year. The Company believes that its investment grade credit ratings, diverse investor base, large value of unencumbered assets and modest leverage enable it to obtain adequate financing, and refinance upcoming maturities, as necessary to meet its ongoing capital, operating, strategic and other liquidity requirements. We also have the ability to manage liquidity during periods of significant financial market disruption through temporary modification of our capital expenditure and share repurchase plans.Summary of Contractual ObligationsThe following table summarizes our significant contractual obligations as of December 31, 2024 (other than recorded obligations related to liabilities associated with environmental remediation costs and non-cancelable operating lease obligations, which are discussed further in Notes 3 and 7 to the Consolidated Financial Statements, respectively) and the anticipated effect of these obligations on our liquidity in future years (in millions):
20252026202720282029ThereafterTotal
Recorded Obligations:
Final capping, closure and post-closure liabilities (a)
$177
$223
$265
$197
$166
$3,762
$4,790Debt payments (b)
2,6137472,0221,9692,04814,68024,079Unrecorded Obligations:
Interest on debt (c)928888838
7366475,1689,205Estimated unconditional purchase obligations (d)
27427014296685561,406
Anticipated liquidity impact as of December 31, 2024
$3,992
$2,128
$3,267
$2,998
$2,929
$24,166
$39,480
(a) Includes liabilities for final capping, closure and post-closure costs recorded in our Consolidated Balance Sheet as of December 31, 2024, without the impact of discounting and inflation. Our recorded liabilities for final capping, closure and post-closure costs will increase as we continue to place additional tons within the permitted airspace at our landfills.(b) These amounts represent the scheduled principal payments based on their contractual maturities related to our long-term debt and financing leases, excluding interest. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding our debt obligations.(c) Interest on our fixed-rate debt was calculated based on contractual rates and interest on our variable-rate debt was calculated based on interest rates as of December 31, 2024. As of December 31, 2024, we had $251 million of accrued interest related to our debt obligations.
66
Table of Contents(d) Our obligations represent purchase commitments from which we expect to realize an economic benefit in future periods. We have also made certain guarantees that we do not expect to materially affect our current or future financial position, results of operations or liquidity. See Note 10 to the Consolidated Financial Statements for discussion of the nature and terms of our unconditional purchase obligations and guarantees.Summary of Cash and Cash Equivalents, Restricted Funds and Debt Obligations
The following is a summary of our cash and cash equivalents, restricted funds and debt balances as of December 31 (in millions):
20242023Cash and cash equivalents
$414
$458Restricted funds:
Insurance reserves
$385
$376Final capping, closure, post-closure and environmental remediation funds
128
119Other
—17Total restricted funds (a)
$513
$512Debt:
Current portion
$1,359
$334Long-term portion
22,54115,895Total debt
$23,900
$16,229(a)As of December 31, 2024 and 2023, $100 million and $90 million, respectively, of these account balances was included in other current assets in our Consolidated Balance Sheets.
Debt — We use long-term borrowings in addition to the cash we generate from operations as part of our overall financial strategy to support and grow our business. We primarily use senior notes and tax-exempt bonds to borrow on a long-term basis, but we also use other instruments and facilities, when appropriate. The components of our borrowings as of December 31, 2024 are described in Note 6 to the Consolidated Financial Statements.
As of December 31, 2024, we had approximately $4.0 billion of debt maturing within the next 12 months, including (i) $1.4 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (ii) $1.2 billion of short-term borrowings under our commercial paper program (net of related discount on issuance); (iii) $422 million of 3.125% senior notes that mature in March 2025; (iv) $500 million of 0.750% senior notes that mature in November 2025 and (v) $438 million of other debt with scheduled maturities within the next 12 months, including $298 million of tax-exempt bonds. As of December 31, 2024, we have classified $2.6 billion of debt maturing in the next 12 months as long term because we have the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity under our $3.5 billion long-term U.S. and Canadian revolving credit facility (“$3.5 billion revolving credit facility”). The remaining $1.4 billion of debt maturing in the next 12 months is classified as current obligations.
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Senior Notes — In July 2024, WMI issued $750 million of 4.950% senior notes due July 2027 and $750 million of 4.950% notes due July 2031, the net proceeds of which were $1.49 billion. The net proceeds were used primarily to reduce outstanding borrowings under our commercial paper program. We also repaid $156 million of WMI’s 3.500% senior notes upon maturity in May 2024.
In August 2024, WMI entered into a delayed draw Term Credit Agreement in a principal amount of up to $7.2 billion (the “Term Credit Agreement”). In October 2024, we drew $5.2 billion of borrowings under the Term Credit Agreement that were applied to funding our acquisition of Stericycle. In November 2024, we repaid all outstanding borrowings and contemporaneously terminated the Term Credit Agreement, resulting in a $7 million loss on early extinguishment of debt. See Note 6 to the Consolidated Financial Statements for further discussion.
In November 2024, we issued senior notes, the net proceeds of which were approximately $5.2 billion, consisting of (i) $1.0 billion of 4.500% senior notes due March 2028; (ii) $700 million of 4.650% senior notes due March 2030; (iii) $750 million of 4.800% senior notes due March 2032; (iv) $1.5 billion of 4.950% senior notes due March 2035; and (v) $1.25 billion of 5.350% senior notes due October 2054. We used the net proceeds to repay all outstanding borrowing under the Term Credit Agreement.
Stericycle Exchange Offer and Consent Solicitation — On November 8, 2024, we completed our private offer to eligible holders to exchange $500 million of outstanding 3.875% senior notes issued by Stericycle (the “Stericycle Notes”) for new notes issued by us (the “WM Notes”) and cash. The WM Notes have the same interest rate, interest payment dates, and maturity date as the exchanged Stericycle Notes but differ in certain respects from the Stericycle Notes, including with respect to the redemption provisions. Approximately $485 million in aggregate principal amount of the Stericycle Notes, or 97%, were tendered and accepted, and new WM Notes were issued. The portion of Stericycle Notes not exchanged, approximately $15 million, remains an outstanding obligation of Stericycle, our wholly-owned subsidiary. The debt exchange is accounted for as a modification of debt, as the financial terms of the WM Notes do not differ from the Stericycle Notes, and there is no substantial difference between the present value of cash flows under each respective set of notes. In connection with the exchange offer, we solicited and obtained sufficient consents to amend the Stericycle Notes and related indenture to eliminate substantially all the restrictive covenants, restrictive provisions and events of default, other than payment-related, guarantee-related and bankruptcy-related events of default, and such amendments took effect with respect to the remaining Stericycle Notes on November 8, 2024.
We have credit lines in place to support our liquidity and financial assurance needs. The following table summarizes our outstanding letters of credit, categorized by type of facility as of December 31 (in millions):
20242023Revolving credit facility (a)
$224
$180Other letter of credit lines (b)
862
834$1,086
$1,014
(a) As of December 31, 2024 and 2023, we had an unused and available credit capacity of $2.1 billion and $2.5 billion, respectively.
(b) As of December 31, 2024, these other letter of credit lines are uncommitted with terms extending through December 2028.Guarantor Financial InformationWM Holdings has fully and unconditionally guaranteed all of WMI’s senior indebtedness. WMI has fully and unconditionally guaranteed all of WM Holdings’ senior indebtedness. None of WMI’s other subsidiaries have guaranteed any of WMI’s or WM Holdings’ debt. In lieu of providing separate financial statements for the subsidiary issuer and guarantor (WMI and WM Holdings), we have presented the accompanying supplemental summarized combined balance sheet and income statement information for WMI and WM Holdings on a combined basis after elimination of intercompany transactions between WMI and WM Holdings and amounts related to investments in any subsidiary that is a non-guarantor (in millions):
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December 31, 2024Balance Sheet Information:
Current assets
$15Noncurrent assets
14Current liabilities
1,367Noncurrent liabilities:
Advances due to affiliates
15,328Other noncurrent liabilities
20,140
Year Ended
December 31, 2024Income Statement Information:
Revenue
$
—
Operating income
(547)Net loss
(405)
Summary of Cash Flow Activity
The following is a summary of our cash flows for the year ended December 31 (in millions):
20242023
2022Net cash provided by operating activities
$5,390
$4,719
$4,536
Net cash used in investing activities
$
(10,601)
$(3,091)
$(3,063)
Net cash provided by (used in) financing activities
$5,155
$
(1,524)
$
(1,216)
Net Cash Provided by Operating Activities — Our operating cash flows increased in 2024, as compared with 2023, by $671 million primarily driven by (i) higher earnings in our Collection and Disposal businesses; (ii) favorable changes in working capital, net of effects of acquisitions and divestitures and (iii) lower annual incentive compensation payments. This increase was partially offset by higher cash interest and income tax payments.
Our operating cash flows increased in 2023, as compared with 2022, by $183 million primarily driven by higher earnings attributable to our Collection and Disposal businesses and lower income tax payments as a result of a deposit of approximately $103 million that was made to the IRS in 2022 related to a disputed tax matter discussed within Note 8 to the Consolidated Financial Statements. These increases were partially offset by (i) unfavorable changes in working capital, net of effects of acquisitions and divestitures; (ii) higher interest payments and (iii) higher incentive compensation payments.Net Cash Used in Investing Activities — The most significant items affecting the comparison of our investing cash flows for the periods presented are summarized below:● Acquisitions — Our spending on acquisitions was $7,503 million, $173 million and $377 million in 2024, 2023 and 2022, respectively, of which $7,488 million, $170 million and $377 million, respectively, are considered cash used in investing activities. The remaining spend is cash used in financing activity related to the timing of contingent consideration paid. Excluding our acquisition of Stericycle in 2024, substantially all of the remaining acquisitions are related to our solid waste and recycling businesses.
● Capital Expenditures — We used $3,231 million, $2,895 million and $2,587 million for capital expenditures in 2024, 2023 and 2022, respectively. The increase in capital spending in 2024 is primarily driven by (i) our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments; (ii) an increase in truck spending in the current year due to supply chain constraints on truck deliveries in the prior year and (iii) capital expenditures within our WM Healthcare Solutions segment to support the business. The increase in 2023 is primarily driven by our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments, as well as inflationary increases in many fixed asset categories required to support ongoing operations and investments in the Company’s landfills to reduce greenhouse gas emissions .
69Table of ContentsThe Company continues to maintain a disciplined focus on capital management to prioritize investments for expansion, the replacement of aging assets and assets that support our strategy of differentiation and continuous improvement through efficiency and innovation. The Company expects to invest $3.0 billion in growth investments across the recycling and renewable energy platforms from 2022 to 2026, which includes the $1.7 billion already invested in 2023 and 2024.
● Divestitures — Proceeds from divestitures of businesses and other assets, net of cash divested, were $158 million, $78 million and $27 million in 2024, 2023 and 2022, primarily as the result of the sale of certain non-strategic assets.
● Other, Net — Our spending within other, net was $40 million, $104 million and $126 million in 2024, 2023 and 2022, respectively. During 2024, 2023 and 2022, we used $4 million, $61 million and $23 million, respectively, of cash from restricted cash and cash equivalents to invest in available-for-sale securities. During 2024, 2023 and 2022, we used $33 million, $20 million and $28 million, respectively, to make initial cash payments associated with low-income housing investments. In 2022, we also used $67 million to fund secured convertible promissory notes associated with an acquisition.Net Cash Provided by (Used in) Financing Activities — The most significant items affecting the comparison of our financing cash flows for the periods presented are summarized below:
● Debt Borrowings (Repayments) — The following summarizes our cash borrowings and repayments of debt for the year ended December 31 (in millions):
20242023
2022Borrowings :
Commercial paper program
$12,678
$17,799
$
6,596Term loan (a)
5,200
—
1,000Senior notes
6,650
3,207
992
Tax-exempt bonds
50
300
100
$24,578
$21,306
$
8,688Repayments :
Commercial paper program
$(12,319)
$(18,709)
$
(6,664)Term loan (a)
(5,200)
(1,000)
—Senior notes
(156)
(500)
(500)Tax-exempt bonds(60)(65)
(71)Other debt(135)
(120)(93)
$
(17,870)
$(20,394)
$(7,328)
Net cash borrowings (repayments)
$6,708
$
912
$
1,360
(a) In October 2024, we drew $5.2 billion of borrowings under the Term Credit Agreement that were applied to funding our acquisition of Stericycle. In November 2024, we repaid all outstanding borrowings and contemporaneously terminated the Term Credit Agreement.Refer to Note 6 to the Consolidated Financial Statements for additional information related to our debt borrowings and repayments.● Common Stock Repurchase Program — For the periods presented, all share repurchases have been made in accordance with financial plans approved by our Board of Directors. We allocated $262 million, $1,302 million and $1,500 million of available cash to common stock repurchases during 2024, 2023, and 2022, respectively. In 2024, we announced our temporary suspension of share repurchase activity as a result of the acquisition of Stericycle. We expect to resume share repurchase once the Company’s leverage returns to targeted levels, which is currently projected to be about 18 months after the November 2024 acquisition of Stericycle. See Note 13 to the Consolidated Financial Statements for additional information about our share repurchase activity.
70Table of Contents● Cash Dividends — For the periods presented, all dividends have been declared by our Board of Directors. Cash dividends declared and paid were $1,210 million in 2024, or $3.00 per common share, $1,136 million in 2023, or $2.80 per common share, and $1,077 million in 2022, or $2.60 per common share.
In December 2024, we announced that our Board of Directors expects to increase the quarterly dividend from $0.75 to $0.825 per share for dividends declared in 2025. However, all future dividend declarations are at the discretion of the Board of Directors and depend on various factors, including our net earnings, financial condition, cash required for future business plans, growth and acquisitions and other factors the Board of Directors may deem relevant.
● Exercise of Common Stock Options — The exercise of common stock options generated financing cash inflows of $53 million, $44 million and $44 million from the exercise of 693,000, 597,000 and 675,000 of employee stock options during 2024, 2023 and 2022, respectively.
● Other, Net — In 2022, we acquired a controlling interest in a business engaged in accelerating film and plastic wrap recycling capabilities, and in the fourth quarter of 2024, we acquired the remaining minority interests in this business for $41 million.Free Cash Flow
We are presenting free cash flow, which is a non-GAAP measure of liquidity, in our disclosures because we use this measure in the evaluation and management of our business. We define free cash flow as net cash provided by operating activities, less capital expenditures, plus proceeds from divestitures of businesses and other assets, net of cash divested. We believe it is indicative of our ability to pay our quarterly dividends, repurchase common stock, fund acquisitions and other investments and, in the absence of refinancings, to repay our debt obligations. Free cash flow is not intended to replace net cash provided by operating activities, which is the most comparable GAAP measure. We believe free cash flow gives investors useful insight into how we view our liquidity, but the use of free cash flow as a liquidity measure has material limitations because it excludes certain expenditures that are required or that we have committed to, such as declared dividend payments and debt service requirements.
Our calculation of free cash flow and reconciliation to net cash provided by operating activities is shown in the table below for the year ended December 31 (in millions), and may not be calculated the same as similarly-titled measures presented by other companies:
20242023
2022Net cash provided by operating activities
$5,390
$4,719
$
4,536Capital expenditures to support the business
(2,281)
(2,131)
(2,026)Capital expenditures - sustainability growth investments (a)
(950)
(764)
(561)Total capital expenditures
(3,231)(2,895)
(2,587)Proceeds from divestitures of businesses and other assets, net of cash divested
15878
27Free cash flow
$2,317
$1,902
$
1,976
(a) These growth investments are intended to further our sustainability leadership position by increasing recycling volumes and growing renewable natural gas generation and we expect they will deliver circular solutions for our customers and drive environmental value to the communities we serve.Critical Accounting Estimates and AssumptionsIn preparing our financial statements, we make numerous estimates and assumptions that affect the accounting for and recognition and disclosure of assets, liabilities, equity, revenues and expenses. We must make these estimates and assumptions because certain information that we use is dependent on future events, cannot be calculated with precision from available data or simply cannot be calculated. In some cases, these estimates are difficult to determine, and we must exercise significant judgment. In preparing our financial statements, the most difficult, subjective and complex estimates and the assumptions that present the greatest amount of uncertainty relate to our accounting for landfills, environmental remediation liabilities, long-lived asset impairments, intangible asset impairments and the fair value of assets and liabilities
71Table of Contentsacquired in business combinations. Each of these items is discussed in additional detail below and in Note 2 to the Consolidated Financial Statements. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements.Landfills
Accounting for landfills requires that significant estimates and assumptions be made regarding (i) the cost to construct and develop each landfill asset; (ii) the estimated fair value of final capping, closure and post-closure asset retirement obligations, which must consider both the expected cost and timing of these activities and (iii) the determination of each landfill’s remaining permitted and expansion airspace.
Landfill Costs — We estimate the total cost to develop each of our landfill sites to its remaining permitted and expansion airspace. This estimate includes such costs as landfill liner material and installation, excavation for airspace, landfill leachate collection systems, landfill gas collection systems, environmental monitoring equipment for groundwater and landfill gas, directly related engineering, capitalized interest, on-site road construction and other capital infrastructure costs. Additionally, landfill development includes all land purchases for the landfill footprint and landfill buffer property. The projection of these landfill costs is dependent, in part, on future events. The remaining depletable basis of each landfill includes costs to develop a site to its remaining permitted and expansion airspace and includes amounts previously expended and capitalized, net of accumulated airspace depletion, and projections of future purchase and development costs.
Final Capping Costs — We estimate the cost for each final capping event based on the area to be capped and the capping materials and activities required. The estimates also consider when these costs are anticipated to be paid and factor in inflation and discount rates. Our engineering personnel allocate landfill final capping costs to specific final capping events and the capping costs are depleted as waste is disposed of at the landfill. We review these costs annually, or more often if significant facts change. Changes in estimates, such as timing or cost of construction, for final capping events immediately impact the required liability and the corresponding asset. When the change in estimate relates to a fully consumed landfill, the adjustment to the asset must be depleted immediately through expense. When the change in estimate relates to a final capping event at a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace depletion.
Closure and Post-Closure Costs — We base our estimates for closure and post-closure costs on our interpretations of permit and regulatory requirements for closure and post-closure monitoring and maintenance. The estimates for landfill closure and post-closure costs also consider when the costs are anticipated to be paid and factor in inflation and discount rates. The possibility of changing legal and regulatory requirements and the forward-looking nature of these types of costs make any estimation or assumption less certain. Changes in estimates for closure and post-closure events immediately impact the required liability and the corresponding asset. When the change in estimate relates to a fully consumed landfill, the adjustment to the asset must be depleted immediately through expense. When the change in estimate relates to a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace depletion.
Remaining Permitted Airspace — Our engineers, in consultation with third-party engineering consultants and surveyors, are responsible for determining remaining permitted airspace at our landfills. The remaining permitted airspace is determined by an annual survey, which is used to compare the existing landfill topography to the expected final landfill topography.
Expansion Airspace — We also include currently unpermitted expansion airspace in our estimate of remaining permitted and expansion airspace in certain circumstances. First, for unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, we must believe that obtaining the expansion permit is likely. Second, we must generally expect the initial expansion permit application to be submitted within one year and the final expansion permit to be received within five years, in addition to meeting the following criteria:
● Personnel are actively working on the expansion of an existing landfill, including efforts to obtain land use and local, state or provincial approvals;72
Table of Contents● We have a legal right to use or obtain land to be included in the expansion plan;
● There are no significant known technical, legal, community, business, or political restrictions or similar issues that could negatively affect the success of such expansion; and● Financial analysis has been completed based on conceptual design, and the results demonstrate that the expansion meets Company criteria for investment.
These criteria are evaluated by our field-based engineers, accountants, managers and others to identify potential obstacles to obtaining the permits. Once the unpermitted airspace is included, our policy provides that airspace may continue to be included in remaining permitted and expansion airspace even if certain of these criteria are no longer met as long as we continue to believe we will ultimately obtain the permit, based on the facts and circumstances of a specific landfill. In these circumstances, continued inclusion must be approved through a landfill-specific review process that includes approval by our Chief Financial Officer on a quarterly basis.
When we include the expansion airspace in our calculations of remaining permitted and expansion airspace, we also include the projected costs for development, as well as the projected asset retirement costs related to final capping, closure and post-closure of the expansion in the depletable basis of the landfill.
Once the remaining permitted and expansion airspace is determined in cubic yards, an airspace utilization factor (“AUF”) is established to calculate the remaining permitted and expansion capacity in tons. The AUF is established using the measured density obtained from previous annual surveys and is then adjusted to account for future settlement. The amount of settlement that is forecasted will consider several site-specific factors including current and projected mix of waste type, initial and projected waste density, estimated number of years of life remaining, depth of underlying waste, anticipated access to moisture through precipitation or recirculation of landfill leachate and operating practices. In addition, the initial selection of the AUF is subject to a subsequent multi-level review by our engineering group and the AUF used is reviewed on a periodic basis and revised as necessary. Our historical experience generally indicates that the impact of settlement at a landfill is greater later in the life of the landfill when the waste placed at the landfill approaches its highest point under the permit requirements.
After determining the costs and remaining permitted and expansion capacity at each of our landfills, we determine the per ton rates that will be expensed as waste is received and deposited at the landfill by dividing the costs by the corresponding number of tons. We calculate per ton depletion rates for each landfill for assets associated with each final capping event, for assets related to closure and post-closure activities and for all other costs capitalized or to be capitalized in the future. These rates per ton are updated annually, or more often, as significant facts change.
It is possible that actual results, including the amount of costs incurred, the timing of final capping, closure and post-closure activities, our airspace utilization or the success of our expansion efforts could ultimately turn out to be significantly different from our estimates and assumptions. To the extent that such estimates, or related assumptions, prove to be significantly different than actual results, lower earnings may be experienced due to higher depletion rates or higher expenses; or higher earnings may result if the opposite occurs. Most significantly, if it is determined that expansion capacity should no longer be considered in calculating the recoverability of a landfill asset, we may be required to recognize an asset impairment or incur significantly higher depletion expense. If at any time management makes the decision to abandon the expansion effort, the capitalized costs related to the expansion effort are expensed immediately.
Environmental Remediation Liabilities
A significant portion of our operating costs and capital expenditures could be characterized as costs of environmental protection. The nature of our operations, particularly with respect to the construction, operation and maintenance of our landfills subjects us to an array of laws and regulations relating to the protection of the environment. Under current laws and regulations, we may have liabilities for environmental damage caused by our operations, or for damage caused by conditions that existed before we acquired a site. In addition to remediation activity required by state or local authorities, such liabilities include potentially responsible party (“PRP”) investigations. The costs associated with these liabilities can include settlements, certain legal and consultant fees, as well as incremental internal and external costs directly associated with site investigation and clean up.73Table of ContentsWhere it is probable that a liability has been incurred, we estimate costs required to remediate sites based on site-specific facts and circumstances. We routinely review and evaluate sites that require remediation and determine our estimated cost for the likely remedy based on a number of estimates and assumptions. Next, we review the same type of information with respect to other named and unnamed PRPs. Estimates of the costs for the likely remedy are then either developed using our internal resources or by third-party environmental engineers or other service providers. Internally developed estimates are based on:● Management’s judgment and experience in remediating our own and unrelated parties’ sites;
● Information available from regulatory agencies as to costs of remediation;
● The number, financial resources and relative degree of responsibility of other PRPs who may be liable for remediation of a specific site; and
● The typical allocation of costs among PRPs, unless the actual allocation has been determined.
Refer to Note 10 to the Consolidated Financial Statements for additional information on our environmental liabilities.
Fair Value of Nonfinancial Assets and Liabilities
Significant estimates are made in determining the fair value of long-lived tangible and intangible assets (i.e., property and equipment, intangible assets and goodwill) during the impairment evaluation process. In addition, the majority of assets acquired and liabilities assumed in a business combination are required to be recognized at fair value under the relevant accounting guidance.
Fair value is computed using several factors, including projected future operating results, economic projections, anticipated future cash flows, comparable marketplace data and the cost of capital. There are inherent uncertainties related to these factors and to our judgment in applying them in our analysis. However, we believe our methodology for estimating the fair value of our reporting units is reasonable.
Property and Equipment, Including Landfills and Definite-Lived Intangible Assets — We monitor the carrying value of our long-lived assets for potential impairment on an ongoing basis and test the recoverability of such assets generally using significant unobservable (“Level 3”) inputs whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. These events or changes in circumstances, including management decisions pertaining to such assets, are referred to as impairment indicators. If an impairment indicator occurs, we perform a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. If cash flows cannot be separately and independently identified for a single asset, we will determine whether an impairment has occurred for the group of assets for which we can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset or asset group to its carrying value and the difference is recorded in the period that the impairment indicator occurs. Fair value is generally determined by considering (i) internally developed discounted projected cash flow analysis of the asset or asset group; (ii) third-party valuations and/or (iii) information available regarding the current market for similar assets. Estimating future cash flows requires significant judgment and projections may vary from the cash flows eventually realized, which could impact our ability to accurately assess whether an asset has been impaired.
The assessment of impairment indicators and the recoverability of our capitalized costs associated with landfills and related expansion projects require significant judgment due to the unique nature of the waste industry, the highly regulated permitting process and the sensitive estimates involved. During the review of a landfill expansion application, a regulator may initially deny the expansion application although the expansion permit is ultimately granted. In addition, management may periodically divert waste from one landfill to another to conserve remaining permitted landfill airspace, or a landfill may be required to cease accepting waste, prior to receipt of the expansion permit. However, such events occur in the ordinary course of business in the waste industry and do not necessarily result in impairment of our landfill assets because, after consideration of all facts, such events may not affect our belief that we will ultimately obtain the expansion permit. As a result, our tests of recoverability, which generally make use of a probability-weighted cash flow estimation approach, may indicate that no impairment loss should be recorded.74Table of Contents
Indefinite-Lived Intangible Assets, Including Goodwill — At least annually using a measurement date of October 1, and more frequently if warranted, we assess the indefinite-lived intangible assets including the goodwill of our reporting units for impairment using Level 3 inputs.We first perform a qualitative assessment to determine if it was more likely than not that the fair value of a reporting unit is less than its carrying value. If the assessment indicates a possible impairment, we complete a quantitative review, comparing the estimated fair value of a reporting unit to its carrying amount, including goodwill. An impairment charge is recognized if the asset’s estimated fair value was less than its carrying amount. Fair value is typically estimated using an income approach using Level 3 inputs. However, when appropriate, we may also use a market approach. The income approach is based on the long-term projected future cash flows of the reporting units. We discount the estimated cash flows to present value using a weighted average cost of capital that considers factors such as market assumptions, the timing of the cash flows and the risks inherent in those cash flows. We believe that this approach is appropriate because it provides a fair value estimate based upon the reporting units’ expected long-term performance considering the economic and market conditions that generally affect our business. The market approach estimates fair value by measuring the aggregate market value of publicly-traded companies with similar characteristics to our business as a multiple of their reported earnings. We then apply that multiple to the reporting units’ earnings to estimate their fair values. We believe that this approach may also be appropriate in certain circumstances because it provides a fair value estimate using valuation inputs from entities with operations and economic characteristics comparable to our reporting units.
Acquisitions — In accordance with the purchase method of accounting, the purchase price paid for an acquisition is allocated to the assets and liabilities acquired based upon their estimated fair values as of the acquisition date, with the excess of the purchase price over the net assets acquired recorded as goodwill. When we are in the process of valuing all of the assets and liabilities acquired in an acquisition, there can be subsequent adjustments to our estimates of fair value and resulting preliminary purchase price allocation. Generally, the valuation of our acquired asset and liabilities rely on complex estimates and assumptions.Acquisition-date fair value estimates are revised as necessary if, and when, additional information regarding these contingencies becomes available to further define and quantify assets acquired and liabilities assumed. Subsequent to finalization of purchase accounting, these revisions are accounted for as adjustments to income from operations. All acquisition-related transaction costs are expensed as incurred. See Note 17 to the Consolidated Financial Statements for additional information related to our acquisitions.
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net . See Note 11 to the Consolidated Financial Statements for additional information related to Asset Impairments and Unusual Items.
Inflation
Variability in economic conditions, including inflation, interest rates, employment trends, and supply chain reliability, can create risk and uncertainty in financial outlook. We take proactive steps to recover and mitigate inflationary cost pressures through our overall pricing efforts and by managing our costs through efficiency, labor productivity, and investments in technology to automate certain aspects of our business. These efforts may not be successful for various reasons including the pace of inflation, operating cost inefficiencies, market responses, and contractual limitations, such as the timing lag in our ability to recover increased costs under certain contracts that are tied to a price escalation index with a lookback provision.
Refer to Item 1A. Risk Factors for further discussion.
FY 2025-12-31 (later)
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.This section includes a discussion of our results of operations for the year ended December 31, 2025. This discussion may contain forward-looking statements. See “Cautionary Statement about Forward-Looking Statements” in Part I of this Annual Report on Form 10-K for more information. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or anticipated results. These risks and uncertainties include, but are not limited to, those described in Part I, Item 1A. Risk Factors and elsewhere in this report and may also be described from time to time in our future reports filed with the U.S. Securities and Exchange Commission (“SEC”). The following discussion should be read considering those disclosures and together with the Consolidated Financial Statements and the notes thereto.
For further discussion regarding our results of operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023, refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 .OverviewWe are North America’s leading provider of comprehensive environmental solutions, primarily providing services throughout the United States (“U.S.”) and Canada. We partner with our customers and the communities we serve to manage and reduce waste at each stage from collection to disposal, while recovering valuable resources and creating clean, renewable energy. We own or operate the largest network of landfills throughout the U.S. and Canada. In order to make disposal more practical for larger urban markets, where the distance to landfills is typically farther, we manage transfer stations that consolidate, compact and transport waste efficiently and economically. Our solid waste business is operated and managed locally by our subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, recycling and resource recovery services. Through our Waste Management Renewable Energy (“Renewable Energy”) segment, we are also a leading developer, operator and owner of landfill gas-to-energy facilities in the U.S. and Canada that produce renewable electricity and renewable natural gas (“RNG”), which is a significant source of fuel that we allocate to our natural gas fleet. Following our 2024 acquisition of Stericycle, Inc. (“Stericycle”), our Healthcare Solutions segment provides regulated waste and compliance services (“RWCS”) and secure information destruction (“SID”) services in the U.S., Canada and Western Europe that protect people and brands, promote health and well-being and safeguard the environment. Additionally, through our Recycling Processing and Sales segment, we are a leading recycler in the U.S. and Canada, handling materials that include paper, cardboard, glass, plastic and metal.
Our senior management evaluates, oversees and manages the financial performance of our business through five reportable segments, referred to as (i) Collection and Disposal - East Tier (“East Tier”); (ii) Collection and Disposal - West Tier (“West Tier”); (iii) Recycling Processing and Sales; (iv) Renewable Energy and (v) Healthcare Solutions. Our East and West Tiers, along with certain ancillary services (“Other Ancillary”) that are not managed through our Tier segments but that support our collection and disposal operations, form our “Collection and Disposal” businesses. We also provide additional services not managed through our five reportable segments, which are presented as Corporate and Other.Stericycle AcquisitionOn November 4, 2024, we completed our acquisition of all outstanding shares of Stericycle for $62.00 per share in cash, pursuant to an Agreement and Plan of Merger dated June 3, 2024. Total enterprise value of the acquisition was $7.2 billion (net of cash acquired) when including the assumption of $0.5 billion of debt and the repayment of approximately $0.8 billion of net debt. The acquisition expanded our offerings in the U.S., Canada and parts of Western Europe. The post-closing operating results of Stericycle have been included in our Consolidated Financial Statements within our Healthcare Solutions segment.
42Table of ContentsFor the year ended December 31, 2025, we incurred acquisition and integration related costs of $120 million, comprised of $89 million of selling, general and administrative costs and $31 million of restructuring costs. For the year ended December 31, 2024, we incurred acquisition and integration related costs of $160 million, which were primarily classified as selling, general and administrative expenses.Refer to Note 19 for more information on the performance of our Healthcare Solutions segment.Collection and DisposalOur Collection and Disposal businesses provide integrated environmental services, including collection, transfer and disposal. We evaluate our Collection and Disposal businesses primarily through two geographic segments, East Tier and West Tier. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western, Southern and Central U.S., including the upper Midwest region, and British Columbia, Canada. Additionally, we provide Other Ancillary services that are not managed through the Tier segments but that support our collection and disposal operations. Other Ancillary includes specialized services performed for customers that have differentiated needs. These specialized services are targeted at large industrial customers managed through our Sustainability and Environmental Solutions (“SES”) business or geographically dispersed customers managed through our Strategic Business Solutions (“WMSBS”) business. Also included within Other Ancillary are the results of non-operating entities that provide financial assurance and self-insurance support for our business, net of intercompany activity.
Our Collection and Disposal businesses’ operating revenues are primarily generated from fees charged for our collection, transfer and disposal. Revenues from our collection operations are influenced by factors such as collection frequency, type of collection equipment furnished, type and volume or weight of the waste collected, distance to the disposal facility or recycling facility and our disposal costs. Revenues from our landfill operations consist of tipping fees, which are generally based on the type and weight or volume of waste deposited, considering our cost of loading, transporting and disposing of the solid waste at a disposal site. Fees charged at transfer stations are generally based on the weight or volume of waste deposited, considering our cost of loading, transporting and disposing of the solid waste at a disposal site. The fees we charge for our services generally include applicable fees, such as our energy surcharge, which are intended to pass through to customers for direct and indirect costs incurred.
Included within our Collection and Disposal businesses are landfills having (i) 19 third-party power generating facilities converting our landfill gas to fuel electricity generators; (ii) 17 third-party RNG facilities processing landfill gas to be sold to natural gas suppliers and (iii) nine third-party projects delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes. In return for providing our landfill gas, we receive royalties from each facility, including the benefit of a 15% royalty from our Renewable Energy segment based on net operating revenue generated through the sale of RNG, renewable identification numbers (“RINs”), electricity and capacity, Renewable Energy Credits (“RECs”) and related environmental attributes from the 86 landfill beneficial use renewable energy projects owned by Renewable Energy on our active landfills, which is eliminated in consolidation.Recycling Processing and Sales
Our Recycling Processing and Sales segment includes the processing and sales of materials collected from residential, commercial and industrial customers. The materials are delivered to and processed at one of our many recycling facilities. Through our brokerage business, we also manage the marketing of recycling commodities that are processed in our facilities and by third parties by maintaining comprehensive service centers that continuously analyze market prices, logistics, market demands and product quality.Recycling Processing and Sales revenues generally consist of tipping fees and the sale of recycling commodities to and/or on behalf of third parties. Our Recycling Processing and Sales segment excludes the collection of recycled materials from our residential, commercial, and industrial customers which is included within our Collection and Disposal businesses.
43Table of ContentsRenewable Energy
Our Renewable Energy segment develops, operates and promotes projects for the beneficial use of landfill gas. Landfill gas is produced naturally as waste decomposes in a landfill. The methane component of the landfill gas is a readily available, renewable energy source that can be gathered and used beneficially as an alternative to fossil fuel. Renewable Energy converts landfill gas into several sources of renewable energy which include RNG, electricity and capacity, heat and/or steam. Renewable Energy also generates (i) RINs under the Renewable Fuel Standard (“RFS”) program; (ii) other credits under a variety of state programs associated with the use of RNG in our compressed natural gas fleet and (iii) RECs associated with the production of electricity. The RINs, RECs, and other credits are sold to counterparties who are obligated under the regulatory programs and have a responsibility to procure RINs, RECs, and other credits proportionate to their fossil fuel production and imports. RINs and RECs prices generally fluctuate in response to regulations enacted by the Environmental Protection Agency (“EPA”) or other regulatory bodies, as well as changes in supply and demand.
As of December 31, 2025, we had 103 landfill gas beneficial use projects producing commercial quantities of methane gas at owned or operated landfills. For 62 of these projects, the processed gas is used to fuel electricity generators. The electricity is then sold to public utilities, municipal utilities or power cooperatives. For 24 of these projects, the gas is used at the landfill or delivered by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes. For 17 of these projects, the landfill gas is processed to pipeline quality RNG and then sold to natural gas suppliers. Additionally, three projects are on third-party landfills. The revenues from these facilities are primarily generated through (i) the sale of captured and converted landfill methane gas; (ii) the sale of RINs under the RFS program implemented by the EPA; (iii) sale of Low Carbon Fuel credits designed to stimulate the use of low-carbon fuels and (iv) the sale of energy (electricity and capacity) and associated RECs. Renewable Energy is charged a 15% royalty on net operating revenue from these facilities residing on our active and closed landfills from our Collection and Disposal and Corporate and Other businesses, which is eliminated in consolidation. Additionally, Renewable Energy operates and maintains six third-party landfill beneficial gas use projects in return for service revenue. Our Collection and Disposal and Corporate and Other businesses benefit from these projects as well as 54 additional third-party landfill beneficial gas use projects in the form of royalties.
Healthcare Solutions
Our Healthcare Solutions segment includes (i) RWCS which provide compliance programs and collection, processing, and disposal of regulated and specialized waste, including medical, pharmaceutical and hazardous waste and (ii) SID services, which provide for the collection of personal and confidential information for secure destruction and recycling of sorted office paper. While the Healthcare Solutions businesses manage large volumes of waste and other materials, the average volume per customer site is relatively small.
Our customers typically enter into a contract for the provision of services on a scheduled basis, including weekly, monthly or on an as-needed basis over the contract term. Under the contract terms, the Healthcare Solutions businesses receive fees based on a monthly, quarterly or annual rate and/or fees based on contractual rates depending upon measures including the type and volume or weight of waste. Operating revenues are invoiced based on the terms of the underlying contract either on a regular basis, or as services are performed and are generally due within a short period of time after invoicing based upon normal terms and conditions for our business type and the geography of the services performed.
As of December 31, 2025, our Healthcare Solutions segment operates out of approximately 307 leased and owned facilities worldwide with 51 autoclaves or other alternative medical waste treatment facilities, 17 medical waste incinerator facilities, 99 SID processing facilities and 140 transfer stations.Corporate and OtherWe also provide additional services that are not managed through our operating segments, which are presented in this report as Corporate and Other. This includes the activities of our corporate office, including costs associated with our long-term incentive program, expanded service offerings and solutions (such as our investments in businesses and technologies that are designed to offer services and solutions ancillary or supplementary to our current operations) as well as our closed sites. Also included within our Corporate and Other businesses closed sites are (i) five third-party power
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generating facilities converting our landfill gas to fuel electricity generators; (ii) two third-party projects delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes and (iii) two third-party RNG facilities processing landfill gas to be sold to natural gas suppliers in return for a royalty. Additionally, Corporate and Other benefits from a 15% royalty from our 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 17 landfill beneficial use renewable energy projects owned by Renewable Energy on our closed sites, which is eliminated in consolidation.Business EnvironmentThe waste industry is a comparatively mature and stable industry. However, customers increasingly expect more of their waste materials to be recovered and those waste streams are becoming more complex. In addition, many state and local governments mandate diversion, recycling and waste reduction at the source and prohibit the disposal of certain types of waste at landfills. We monitor these developments to adapt our service offerings. As companies, individuals and communities look for ways to be more sustainable, we promote our comprehensive services that go beyond our core business of collecting and disposing of waste in order to meet their needs. This includes expanding traditional recycling services, increasing organics collection and processing, providing medical waste services and expanding our renewable energy projects to meet the evolving needs of our diverse customer base. As North America’s leading provider of comprehensive environmental solutions, we are taking big, bold steps to catalyze positive change – change that will impact our Company as well as the communities we serve. Consistent with our Company’s long-standing commitment to sustainability and environmental stewardship, we have published our 2025 Sustainability Report, providing details on our sustainability-related performance and outlining progress towards our 2030 sustainability goals. The Sustainability Report conveys the strong linkage between the Company’s sustainability goals and our growth strategy, inclusive of the expansion of the Company’s Recycling Processing and Sales and Renewable Energy segments. The information in this report can be found at sustainability.wm.com but it does not constitute a part of, and is not incorporated by reference into, this Annual Report on Form 10-K. For further discussion see Item 1. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation .
We encounter intense competition from governmental, quasi-governmental and private service providers based on pricing, and to a much lesser extent, the nature of service offerings, particularly in the residential line of business. Our industry is directly affected by changes in general economic factors, including increases and decreases in consumer spending, business expansions and construction activity. These factors generally correlate to volumes of waste generated and impact our revenue. Negative economic conditions and other macroeconomic trends can and have caused customers to reduce their service needs. Such negative economic conditions, in addition to competitor actions, can impact our strategy to negotiate, renew, or expand service contracts and grow our business. We also encounter competition for acquisitions and growth opportunities. General economic factors and the market for consumer goods, in addition to regulatory developments, can also significantly impact commodity prices for the recyclable materials we sell. Significant components of our operating expenses vary directly as we experience changes in revenue due to volume and inflation. Volume changes can fluctuate significantly by line of business and volume changes in higher margin businesses can impact key financial metrics. We must dynamically manage our cost structure in response to volume changes and cost inflation.
We believe the Company’s industry-leading asset network and strategic focus on investing in our people and our digital platform will give the Company the necessary tools to address the evolving challenges impacting the Company and our industry. In line with our commitment to continuous improvement and a differentiated customer experience, we remain focused on our automation and optimization investments to enhance our operational efficiency and change the way we interact with our customers. Advancements made through these initiatives are intended to seamlessly and digitally connect all enterprise functions required to service customers and provide the best experience. We have made significant progress in executing this technology enablement strategy to automate and optimize certain elements of our service delivery model. The key benefits are reduced labor dependency on certain high-turnover jobs, particularly in customer experience, recycling and residential collection, while further elevating our customer self-service through digitalization and implementation of technologies to enhance the safety, reliability and efficiency within our collection operations.
We sometimes experience margin pressures and variability in earnings and margins from our commodity-driven businesses, specifically within our Recycling Processing and Sales and Renewable Energy segments. During 2025, we
45Table of Contentsexperienced decreases in market prices for recycled commodities when compared to prior year caused by a number of factors, including the closure of domestic paper mills, a decrease in demand for recycled content by certain consumer goods producers, focused reduction in cardboard packaging and overall market conditions. While the combined impacts of commodity price fluctuations from the prior year had a modestly favorable impact on the Renewable Energy segment, we may experience more significant impacts from fluctuations in the prices of RINs and natural gas in the future. We continue to take proactive steps to adjust our business models to protect against the down-side risk of changes in commodity prices.
Variability in economic conditions, including inflation, interest rates, employment trends and supply chain reliability, can create risk and uncertainty in financial outlook. We take proactive steps to recover and mitigate inflationary cost pressures through our overall pricing efforts and by managing our costs through efficiency, labor productivity and investments in technology to automate certain aspects of our business. We remain committed to putting our people first to ensure that they are well positioned to execute our daily operations diligently and safely. We remain focused on delivering outstanding customer service, managing our variable costs with changing volumes and investing in technology that will enhance our customers’ experience and provide operating efficiencies intended to reduce our cost to serve.
Financial Results
During 2025, we continued to focus on our priorities to advance our strategy – enhancing employee engagement, permanently reducing our cost to serve our customers through the use of technology and automation, investing in growth through our Recycling Processing and Sales and Renewable Energy segments and integrating the Stericycle business. We continue to invest in our people through paying a competitive market wage, investing in our digital platform and providing training for our team members. We remain committed to our investment in recycling automation, which reduces costs and increases throughput, positioning us to overcome commodity price headwinds and deliver a differentiated service. As part of the ongoing integration of Stericycle, which constitutes our Healthcare Solutions segment, we 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.
Key elements of our 2025 financial results include:
● Revenues of $25,204 million for 2025 compared with $22,063 million in 2024, an increase of $3,141 million, or 14.2%. The increase was primarily due to (i) our recent acquisitions, particularly Stericycle; (ii) higher yield in our Collection and Disposal businesses and (iii) higher volumes primarily in our landfill, renewable energy and recycling businesses. The increase was partially offset by lower residential collection volumes and a reduction in single-stream and brokerage recycled commodity prices;
● Operating expenses of $15,012 million in 2025, or 59.6% of revenues, compared with $13,383 million, or 60.7% of revenues, in 2024. The $1,629 million increase in operating expense compared to prior year related primarily to (i) our recent acquisitions, particularly Stericycle; (ii) incremental costs attributable to RNG facilities brought on line during 2025; (iii) increased landfill volumes and (iv) a decrease in the gains on sale of non-strategic assets. These increases were offset by (i) lower residential volumes; (ii) decreased costs of goods sold due to lower recycling commodity prices and (iii) continued efficiency and cost control in our Collection and Disposal business. Despite the increase in operating expenses, we significantly reduced our 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;
● Selling, general and administrative expenses of $2,722 million in 2025, or 10.8% of revenues, compared with $2,264 million, or 10.3% of revenues, in 2024. The $458 million increase was primarily due to our recent acquisitions, particularly Stericycle, including consulting and technology costs incurred to support Stericycle’s integration;
● Income from operations of $4,308 million, or 17.1% of revenues, in 2025 compared with $4,063 million, or 18.4% of revenues, in 2024. The $245 million increase in the current year earnings was primarily due to (i) growth in our Collection and Disposal businesses; (ii) non-recurring transaction costs incurred in the prior year in connection with our Stericycle acquisition and (iii) higher volumes in our Renewable Energy business due to the completion of projects that increase the beneficial use of landfill gas sold to third parties. This growth was
46Table of Contentspartially offset by an impairment charge in our Recycling Processing and Sales business and higher depreciation and amortization costs and integration related expenses arising from our Stericycle acquisition;
● Net income attributable to Waste Management, Inc. was $2,708 million, or $6.70 per diluted share, compared with $2,746 million, or $6.81 per diluted share, in 2024. The $38 million decrease is primarily due to an increase in interest expense related to the additional debt incurred to finance our Stericycle acquisition. This decline was partially offset by the increase in income from operations, discussed above;
● Net cash provided by operating activities was $6,043 million in 2025, compared with $5,390 million in 2024. The $653 million increase in net cash provided by operating activities was primarily due to (i) higher earnings in our Collection and Disposal businesses; (ii) contributions from our recent acquisitions and (iii) lower cash tax payments. This increase was partially offset by (i) higher cash interest payments primarily due to additional debt incurred to fund our acquisition of Stericycle; (ii) unfavorable changes in working capital, net of effects from acquisitions and divestitures and (iii) higher annual incentive compensation payments;
● Free cash flow was $2,937 million in 2025, compared with $2,317 million in 2024. The $620 million increase in free cash flow was primarily due to the increases in operating cash described above and planned reductions in capital investment in our sustainability growth projects as we move from peak construction of this portfolio into a period where we will harvest strong returns on these businesses. These increases were partially offset by increased capital expenditures to support the business as well as within our Healthcare Solutions segment and lower proceeds from the sale of certain non-strategic assets. Free cash flow is a non-GAAP measure of liquidity. Refer to Free Cash Flow below for our definition of free cash flow, additional information about our use of this measure, and a reconciliation to net cash provided by operating activities, which is the most comparable GAAP measure.
47Table of Contents
Results of Operations
Operating Revenues
The mix of operating revenues for the years ended December 31 are as follows (in millions):
Net
Intercompany
Gross
Operating
Operating
Operating
Revenues
Revenues(a)
RevenuesYear Ended December 31:
2025
Commercial
$5,630
$890
$6,520Industrial
3,106
8833,989Residential
3,510
87
3,597Other collection
3,1752883,463Total collection
15,4212,14817,569Landfill
3,781
1,566
5,347Transfer
1,502
1,127
2,629Total Collection and Disposal
20,7044,84125,545Recycling Processing and Sales
1,4923741,866
Renewable Energy478
3
481
Healthcare Solutions(b)
2,508
443
2,951Corporate and Other
22
30
52Total
$25,204
$5,691
$30,895
2024
Commercial
$5,371
$798
$6,169Industrial
3,089
7943,883Residential
3,466
89
3,555Other collection
2,9642303,194Total collection
14,8901,91116,801Landfill
3,445
1,513
4,958Transfer
1,381
1,067
2,448Total Collection and Disposal
19,7164,49124,207Recycling Processing and Sales
1,6032871,890
Renewable Energy318
3
321
Healthcare Solutions(b)
40368471Corporate and Other
23
25
48Total
$22,063
$4,874
$26,937
(a) Includes each segment’s intercompany activity, including transactions within a segment and between segments. Transactions within and between segments are generally made on a basis intended to reflect the market value of the service.
(b) In the third quarter of 2025, as a result of continued integration efforts and to enhance transparency and accountability, the Company began reflecting intra-segment activity within our Healthcare Solutions segment. These charges were designed to measure profitability at more granular levels of the enterprise and to facilitate clearer financial accountability within operating units. Accordingly, adjustments to the years ended December 31, 2025 and 2024 activity were made to properly reflect intra-segment activity for both periods. Intra-segment operating revenues within Healthcare Solutions for the years ended December 31, 2025 and 2024 are $425 million and $58 million, respectively.
48Table of ContentsThe following table provides details associated with the period-to-period change in revenues and average yield for the year ended December 31 (dollars in millions):
2025 vs. 2024
As a % of
As a % of
Related
Total
Amount Business(a)
Amount Company(b)
Collection and disposal
$7193.8%
Recycling Processing and Sales and Renewable Energy (c)(155)(7.9)
Energy surcharge and mandated fees
444.9
Total average yield (d)
$6082.8%Volume (e)
2060.9Healthcare Solutions (f)
6—
Internal revenue growth
8203.7Acquisitions
2,36510.7Divestitures
(31)(0.1)Foreign currency translation
(13)
(0.1)
Total
$3,14114.2%(a) Calculated by dividing the increase or decrease for the current year by the prior year’s related business revenues adjusted to exclude the impacts of divestitures for the current year.
(b) Calculated by dividing the increase or decrease for the current year by the prior year’s total Company revenues adjusted to exclude the impacts of divestitures for the current year.
(c) Includes combined impact of commodity price variability in both our Recycling Processing and Sales and Renewable Energy segments, as well as changes in certain recycling fees charged by our collection and disposal operations.
(d) The amounts reported herein represent the change in our revenues attributable to average yield for the total Company.(e) Includes activities from our Corporate and Other businesses.(f) The amounts reported herein represent the change in our revenues attributable to our Healthcare Solutions business in the period following the anniversary of the acquisition.The following provides further details about our period-to-period change in revenues:
Average YieldCollection and Disposal Average Yield — This measure reflects the effect on our revenues from the pricing activities of our collection, transfer and landfill operations, exclusive of volume changes. Revenue growth from Collection and Disposal average yield includes not only base rate changes and environmental and service fee fluctuations, but also (i) certain average price changes related to the overall mix of services, which are due to the types of services provided; (ii) changes in average price from new and lost business and (iii) price decreases to retain customers.
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The details of our revenue growth from Collection and Disposal average yield for the year ended December 31 are as follows (dollars in millions):
2025 vs. 2024
As a % of
Related
Amount BusinessCommercial
$2905.1%Industrial
992.8Residential
1815.4Total collection
5704.3Landfill
842.6Transfer
654.9Total Collection and Disposal
$7193.8%Our overall pricing efforts are focused on keeping pace with the increasing costs and capital intensity of our business. We continue to focus on yield growth in our landfill business. This growth was primarily driven by municipal solid waste, which achieved yield of 6.5% in 2025.
Recycling Processing and Sales and Renewable Energy — Recycling Processing and Sales revenues attributable to yield decreased $166 million in 2025 as compared to prior year. Average market prices for single-stream recycled commodities declined approximately 20% in 2025 as compared to the prior year. Revenues attributable to yield in our Renewable Energy segment increased $11 million in 2025 as compared to prior year primarily driven by increases in natural gas and electricity pricing partially offset by declines in RINs pricing. While there may be short-term fluctuations in our commodity-driven businesses as prices change, we believe that our business models and processes appropriately mitigate the downside risk of changes in commodity prices.
Energy Surcharge and Mandated Fees — These fees increased $44 million as compared to prior year. Mandated fees increased $33 million while fluctuations in energy surcharges drove an increase of $11 million as compared to prior year. The mandated fees are primarily related to fees and taxes assessed by various state, county and municipal government agencies at our landfills and transfer stations, particularly in our West Tier as a result of wildfire activity.VolumeOur revenues from volume (excluding volumes from acquisitions and divestitures) increased $206 million, or 0.9%, in 2025 as compared to prior year. Volume growth during 2025 was led by our landfill business, with notable increases in special waste and municipal solid waste volumes in the West Tier, particularly driven by wildfire clean-up efforts. Contributions from growth projects also drove gains in our Renewable Energy and Recycling Processing and Sales segments, and volumes in our Strategic Business Solutions business continued to see growth due to our differentiated service model. These gains were partially offset by declines in residential collection volumes, reflecting our strategic exit from lower-margin contracts.Acquisitions and DivestituresAcquisitions and divestitures resulted in a net increase in revenues of $2,334 million, or 10.6%, in 2025 as compared to prior year. The increase was primarily due to our acquisition of Stericycle in November 2024. The remaining increase was primarily related to our ongoing investment in tuck-in acquisitions of collection and disposal businesses.Operating ExpensesOur operating expenses are comprised of (i) labor and related benefits costs (excluding labor costs associated with maintenance and repairs discussed below), which include salaries and wages, bonuses, related payroll taxes, insurance and benefits costs and the costs associated with contract labor; (ii) transfer and disposal costs, which include tipping fees paid to third-party disposal facilities and transfer stations; (iii) maintenance and repairs costs relating to equipment, vehicles
50
Table of Contents
and facilities and related labor costs; (iv) subcontractor costs, which include the costs of independent haulers who transport waste collected by us to disposal facilities and are affected by variables such as volumes, distance and fuel prices; (v) cost of goods sold, which includes the cost to purchase recycling materials for our Recycling Processing and Sales segment, including certain rebates paid to suppliers; (vi) fuel costs, net of tax credits for alternative fuel, which represent the costs of fuel to operate our truck fleet and landfill operating equipment; (vii) disposal and franchise fees and taxes, which include landfill taxes, municipal franchise fees, host community fees, contingent landfill lease payments and royalties; (viii) landfill operating costs, which include interest accretion on landfill liabilities, interest accretion on and discount rate adjustments to environmental remediation liabilities, leachate and methane collection and treatment, landfill remediation costs and other landfill site costs; (ix) risk management costs, which include general liability, automobile liability and workers’ compensation claims programs costs and (x) other operating costs, which include gains and losses on sale of assets, telecommunications, equipment and facility lease expenses, property taxes, utilities and supplies. Variations in volumes year-over-year, as discussed above in Operating Revenues , in addition to cost inflation, affect the comparability of the components of our operating expenses.The following table summarizes the major components of our operating expenses for the year ended December 31 (dollars in millions and as a percentage of revenues):
2025 2024
Labor and related benefits
$4,476
17.8%
$3,845
17.4%Transfer and disposal costs
1,3995.5
1,3316.0Maintenance and repairs2,2278.8
2,079
9.4
Subcontractor costs2,51410.0
2,240
10.2
Cost of goods sold9243.6
1,048
4.7
Fuel5212.1
437
2.0
Disposal and franchise fees and taxes8033.2
744
3.4
Landfill operating costs5492.2
524
2.4
Risk management3731.5
351
1.6
Other1,2264.9
784
3.6
$
15,01259.6
%$
13,383
60.7
%
During 2025, efficiency gains, improved employee turnover, momentum in truck deliveries, the benefit of customer price increases and higher margin special waste volumes, positioned us to significantly reduce our operating expenses as a percentage of operating revenue. The increase in total operating expenses as compared to prior year related primarily to (i) our recent acquisitions, particularly Stericycle; (ii) incremental costs attributable to RNG facilities brought on line during 2025; (iii) increased landfill volumes and (iv) a decrease in gains on the sale of non-strategic assets in 2025. These increases were partially offset by (i) lower residential volumes; (ii) decreased cost of goods sold attributable to lower recycling commodity prices and (iii) continued operating efficiency and cost control initiatives in our Collection and Disposal businesses.Significant items affecting the comparison of operating expenses between reported periods include:Labor and Related Benefits — The increase in labor and related benefits costs was driven by the addition of employees as a result of our recent acquisitions and annual employee wage increases. These increases were offset in part, by (i) lower annual incentive compensation and employee benefit expenses; (ii) collection efficiency improvements; (iii) lower residential volumes attributable to intentional shedding of lower margin contracts and (iv) improved driver retention.
Transfer and Disposal Costs — The increase in transfer and disposal costs was primarily due to our recent acquisitions and inflationary cost pressures, which includes increased disposal fees at third-party sites and higher rates from our third-party haulers. These increases were offset, in part, by lower residential volumes attributable to intentional shedding of lower margin contracts.
Maintenance and Repairs — The increase in maintenance and repairs costs was primarily due to (i) additional costs incurred as part of our recent acquisitions; (ii) inflation in parts, supplies and third-party services; (iii) annual wage
51Table of Contentsincreases and (iv) higher technician headcount. These increases were offset, in part, by an increase in new truck deliveries, which lowered the average fleet age and reduced demand for parts, supplies and third-party services.
Subcontractor Costs — The increase in subcontractor costs was primarily due to additional costs incurred as a part of our recent acquisitions and inflationary cost pressures, particularly labor costs from third-party haulers.
Cost of Goods Sold — The decrease in cost of goods sold was primarily due to a nearly 20% decrease in average market prices for single-stream recycling commodities. This decrease was partially offset by additional pipeline transportation costs attributable to new RNG facilities brought on line during 2025.
Fuel — The increase in fuel costs was primarily due to our recent acquisitions and the expiration of the federal alternative fuel tax credit on December 31, 2024. This increase was partially offset by a decrease of approximately 3% in average market prices for diesel fuel and reduced diesel consumption due to declines in residential collection volumes.
Disposal and Franchise Fees and Taxes — The increase in disposal and franchise fees and taxes was primarily due to an increase in landfill volumes and an overall rate increase in fees and taxes paid to municipalities on our disposal volumes.
Landfill Operating Costs — The increase in landfill operating costs was primarily due to an increase in volumes and higher leachate treatment costs in our West Tier.Risk Management — The increase in risk management costs was primarily due to additional claims and premiums attributable to our recent acquisitions and higher insurance recoveries for property claims in the prior year as compared to 2025 offset, in part, by improved claims experience.Other — The increase in other operating costs was primarily due to (i) additional expenses attributable to our recent acquisitions; (ii) gains on the sale of real estate in 2024 and, to a much lesser extent, (iii) increased utility costs and property taxes largely attributable to new RNG plants brought on line during 2025.Selling, General and Administrative Expenses
Our selling, general and administrative expenses consist of (i) labor and related benefits costs, which include salaries, bonuses, related insurance and benefits, contract labor, payroll taxes and equity-based compensation; (ii) professional fees, which include fees for consulting, legal, audit and tax services; (iii) provision for bad debts, which includes allowances for uncollectible customer accounts and collection fees and (iv) other selling, general and administrative expenses, which include, among other costs, facility-related expenses, voice and data telecommunication, advertising, bank charges, computer costs, travel and entertainment, rentals, postage and printing. In addition, the financial impacts of litigation reserves generally are included in our “Other” selling, general and administrative expenses.
The following table summarizes the major components of our selling, general and administrative expenses for the year ended December 31 (dollars in millions and as a percentage of revenues):
2025 2024
Labor and related benefits
$1,655
6.5%
$1,400
6.4%Professional fees
398
1.6
3581.6Provision for bad debts930.4
51
0.2
Other5762.3
455
2.1
$
2,72210.8
%$
2,264
10.3
%
Selling, general and administrative expenses increased from prior year primarily due to our recent acquisitions, particularly Stericycle.52Table of Contents
Significant items affecting the comparison of our selling, general and administrative expenses between reported periods include:Labor and Related Benefits — The increase in labor and related benefits costs was primarily due to (i) our recent acquisitions; (ii) higher long-term incentive compensation costs and (iii) annual employee wage increases. These increases were partially offset by lower annual incentive compensation and employee benefit expense.
Professional Fees — The increase in professional fees was primarily due to our acquisition and integration of Stericycle.
Provision for Bad Debts — The increase in the provision for bad debts was primarily attributable to our Healthcare Solutions segment, driven by data and system challenges, and an overall increase in revenue and increase in customer account write-offs.
Other — The increase in other expenses was primarily due to increased spend across multiple cost categories, including technology, risk management and advertising, largely driven by the acquisition and integration of Stericycle.Depreciation, Depletion and Amortization Expenses
The following table summarizes the components of our depreciation, depletion and amortization expenses for the year ended December 31 (dollars in millions and as a percentage of revenues):
2025 2024
Depreciation of tangible property and equipment
$1,544
6.1%
$1,292
5.9
%Depletion of landfill airspace
898
3.6
795
3.6
Amortization of intangible assets4211.7
180
0.8
$2,86311.4%
$2,26710.3
%
The increase in depreciation of tangible property and equipment was primarily due to our recent acquisitions and increased investments in capital assets such as equipment, primarily within our sustainability businesses, and trucks. The increase in depletion of landfill airspace from prior year was primarily due to increased volumes at our landfills, particularly in our West Tier, and changes in amortization rates from revisions in landfill estimates. The increase in amortization of intangible assets from prior year was primarily due to the incremental amortization of customer relationships and other intangibles acquired as part of the Stericycle acquisition.
Restructuring
Restructuring charges for the year ended December 31, 2025 were primarily due to employee costs related to integration of our acquisition of Stericycle as well as employee retention and severance costs incurred to support automation at our recycling facilities and in certain back-office functions.(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net
The following table summarizes the major components of (gain) loss from divestitures, asset impairments and unusual items, net for the year ended December 31 (in millions):
2025
2024Gain from divestitures, net
$—
$(26)Asset impairments
23290Other, net
16
18
$
248$
82
During the year ended December 31, 2025, we recognized $248 million of net charges primarily consisting of (i) a $160 million impairment charge related to the decision to temporarily suspend the operations of a business engaged in
53Table of Contentsaccelerating plastic film and wrap recycling capabilities within our Recycling Processing and Sales segment resulting from significant deterioration of market pricing and demand for post-consumer plastics; (ii) a $45 million impairment charge related to the decision to accelerate the closure of a landfill within our East Tier; (iii) a $16 million goodwill impairment charge related to a business engaged in oil recovery and sludge processing services reflected in Other Ancillary within our Collection and Disposal businesses and (iv) $11 million negotiated payment for early termination of a contract in our Renewable Energy segment.
During the year ended December 31, 2024, we recognized $82 million of net charges primarily consisting of (i) a $54 million charge required to increase the estimated fair value of a liability associated with the expected disposition of an investment the Company holds in a waste diversion technology business; (ii) a $14 million loss associated with the divestiture of a minority investment in a medical waste company within Corporate and Other, in connection with our acquisition of Stericycle and (iii) a $13 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site.
See Note 2 to the Consolidated Financial Statements for additional information related to the accounting policy and analysis involved in identifying and calculating impairments. See Note 19 to the Consolidated Financial Statements for additional information related to the impact of impairments on the results of operations of our reportable segments.Income from Operations
The following table summarizes income from operations for the year ended December 31 (dollars in millions):
Period-to-
Period
2025
2024Change Collection and Disposal:
East Tier
$2,904
$2,760$144
5.2%West Tier
2,889
2,693196
7.3Other Ancillary
(16)(9)
(7)*
Collection and Disposal
5,777
5,444333
6.1Recycling Processing and Sales(80)86
(166)*
Renewable Energy1359936
36.4Healthcare Solutions(88)(69)
(19)
27.5Corporate and Other
(1,436)
(1,497)
61
(4.1)Total
$4,308
$4,063$245
6.0%Percentage of revenues
17.1%
18.4%
* Percentage change does not provide a meaningful comparison.Significant items affecting the comparison of income from operations for our segments between the reported periods include:
● Collection and Disposal — Income from operations in our Collection and Disposal businesses increased primarily due to (i) revenue growth from price increases, which translate into increased yield or average unit price; (ii) actions to improve the efficiency and operating costs incurred to serve our customers and (iii) elevated special waste volume in our West Tier, which was favorably impacted by the wildfire clean-up activities. These increases were partially offset by higher depreciation and depletion costs, as discussed in Depreciation, Depletion and Amortization Expenses above, as well as a decrease on the gains on the sale of non-strategic assets when compared to prior year.
● Recycling Processing and Sales — Income from operations in our Recycling Processing and Sales segment decreased primarily due to a $160 million impairment charge related to the decision to temporarily suspend the operations of a business engaged in accelerating plastic film and wrap recycling capabilities due to significant deterioration of market pricing and demand for post-consumer plastics and declining commodity prices compared
54Table of Contentsto prior year. This decrease was partially offset by increased volumes, which can be attributed to the improved throughput of our facilities, the addition of new market facilities and improved operating costs from the automation of our recycling facilities.
● Renewable Energy — Income from operations in our Renewable Energy segment increased primarily due to higher volumes resulting from the completion of projects that increase the beneficial use of landfill gas sold to third parties and higher electricity pricing.
● Healthcare Solutions — The positive earnings contributions from the Healthcare Solutions business were more than offset by depreciation and amortization expenses and integration related expenses, driving a loss in both periods.
● Corporate and Other — Income from operations in our Corporate and Other segment increased primarily due to (i) non-recurring transaction costs incurred in the prior year in connection with our Stericycle acquisition; (ii) lower annual incentive compensation, and (iii) a decline in risk management expenses. The increase was partially offset by (i) annual employee wage increases; (ii) higher long term incentive compensation and (iii) increases in consulting fees driven by integration and business optimization activities related to the acquisition of Stericycle.Interest Expense, NetOur interest expense, net was $912 million and $598 million in 2025 and 2024, respectively. The increase in interest expense, net was primarily related to an increase in our average debt balances and borrowing rates resulting from debt incurred to fund our acquisition of Stericycle. See Note 6 to the Consolidated Financial Statements for more information related to our debt balances.Income Tax ExpenseWe recorded income tax expense of $717 million and $713 million in 2025 and 2024, respectively, resulting in effective income tax rates of 20.9% and 20.6% for the years ended December 31, 2025 and 2024, respectively. The comparability of our income tax expense for the reported periods has been primarily affected by the following:
● Renewable Natural Gas — Through our Renewable Energy segment, we have invested in building landfill gas-to-energy facilities in the U.S. and Canada that produce renewable electricity and RNG. We expect our new RNG facilities to qualify for federal tax credits and to realize those credits through 2027 under Section 48 of the Internal Revenue Code. We completed construction of seven RNG facilities in 2025 and five RNG facilities in 2024, resulting in a reduction to our income tax expense of $184 million and $137 million, respectively (additional information related to these tax credits is included below under the Tax Legislation section);
● Low-Income Housing — During the years ended December 31, 2025 and 2024, we recognized income tax expense of $96 million and $78 million, respectively, related to amortization under ASU 2023-02, and a reduction in our income tax expense of $137 million and $104 million, respectively, primarily due to federal tax credits realized from these investments. See Notes 2, 8, and 18 to the Consolidated Financial Statements for additional information related to these unconsolidated variable interest entities;
● Tax Implications of Impairments — During the year ended December 31, 2024, we recognized additional income tax expense of $14 million due to non-cash impairment charges that were not deductible for tax purposes in the year of impairment. See Note 11 to the Consolidated Financial Statements for more information related to our impairment charges; and
● Tax Legislation — On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (the “OBBBA”) into law. We have evaluated the business tax provisions in the legislation, none of which had a material impact on our effective tax rate. However, we had a beneficial impact to cash taxes related to bonus depreciation.
The Inflation Reduction Act of 2022 (“IRA”) contains several tax-related provisions, including with respect to (i) alternative fuel tax credits; (ii) tax incentives for investments in renewable energy production, carbon capture,
55Table of Contentsand other climate actions and (iii) the overall measurement of corporate income taxes. Given the complexity and uncertainty around the applicability of the legislation to our specific facts and circumstances, we continue to analyze the IRA provisions to identify and quantify potential opportunities and applicable benefits included in the legislation. The provisions of the IRA related to alternative fuel tax credits secured approximately $60 million of annual pre-tax benefit (recorded as a reduction in our operating expense) from tax credits in 2024. The alternative fuel credit expired at the end of 2024 and will not provide any future benefit to the Company without further legislative action. With respect to the investment tax credit, we expect the cumulative benefit to be between $400 million and $425 million, the remainder of which we expect to recognize through 2027. The expected benefit from the investment tax credit is dependent on a number of estimates and assumptions, including the timing of project completion. Finally, we believe that the production tax credit incentives for investments in renewable energy and carbon capture, as expanded by the IRA, may result in an incremental benefit to the Company, although at this time, the anticipated amount of such benefit has not been quantified due, in part, to the lack of regulatory guidance.See Note 8 to the Consolidated Financial Statements for more information related to income taxes.Landfill and Environmental Remediation Discussion and AnalysisWe owned or operated 253 solid waste landfills and four hazardous waste landfills as of December 31, 2025 and 257 solid waste landfills and five hazardous waste landfills as of December 31, 2024. For these landfills, the following table reflects changes in capacity, as measured in tons of waste, for the year ended December 31 and remaining airspace, measured in cubic yards of waste, as of December 31 (in millions):
2025
2024
Remaining
Remaining
Permitted
Expansion
Total
Permitted
Expansion
Total
Capacity
Capacity
Capacity
Capacity
Capacity
Capacity
Balance as of beginning of year (in tons)
5,1741655,3395,2111615,372Acquisitions, divestitures, newly permitted landfills and closures3—3
—8
8Changes in expansions pursued (a)
—40
40
—58
58Expansion permits granted (b)66
(66)
—64
(64)
—Depletable tons received(129)—(129)(125)—(125)Changes in engineering estimates and other (c)(12)
1
(11)24
2
26Balance as of end of year (in tons) (d)5,102
140
5,2425,174
165
5,339Balance as of end of year (in cubic yards) (d)4,982
144
5,1265,049
165
5,214(a) Amounts reflected here relate to the combined impacts of (i) new expansions pursued; (ii) increases or decreases in the airspace being pursued for ongoing expansion efforts; (iii) adjustments for differences between the airspace being pursued and airspace granted and (iv) decreases due to decisions to no longer pursue expansion permits, if any.(b) We received expansion permits at 13 of our landfills during 2025 and 11 of our landfills during 2024, demonstrating our continued success in working with municipalities and regulatory agencies to expand the disposal airspace of our existing landfills.(c) Changes in engineering estimates can result in changes to the estimated available remaining airspace of a landfill or changes in the utilization of such landfill airspace, affecting the number of tons that can be placed in the future. Estimates of the amount of waste that can be placed in the future are reviewed annually by our engineers and are based on a number of factors, including standard engineering techniques and site-specific factors such as current and projected mix of waste type; initial and projected waste density; estimated number of years of life remaining; depth of underlying waste; anticipated access to moisture through precipitation or recirculation of landfill leachate and operating practices. We continually focus on improving the utilization of airspace through efforts that may include recirculating landfill leachate where allowed by permit; optimizing the placement of daily cover materials and increasing initial compaction through improved landfill equipment, operations and training.
(d) See Note 2 to the Consolidated Financial Statements for discussion of converting remaining cubic yards of airspace to tons of capacity.56
Table of ContentsThe depletable tons received at our landfills for the year ended December 31 are shown below (tons in thousands):
2025
2024
# of Depletable Tons per # of Depletable Tons per
Sites Tons Day Sites Tons Day
Solid waste landfills (a)253127,698
470
257124,271
456Hazardous waste landfills4
687
35
626
2257
128,385
473262
124,897
458Solid waste landfills closed, divested, held for sale, or lease or other contractual agreement expired during related year
8
434
2113
128,819
125,010
(a) As of December 31, 2025 and 2024, we had 16 and 15 landfills, respectively, which were not accepting waste.
As of December 31, 2025, we owned or managed 244 sites that are either in closure or post-closure, have received a certification post-closure, or are regulated under a remedial action plan.
Based on remaining permitted airspace as of December 31, 2025 and projected annual disposal volume, the weighted average remaining landfill life for all of our owned or operated landfills is approximately 38 years. Many of our landfills have the potential for expanded airspace beyond what is currently permitted. We monitor the availability of permitted airspace at each of our landfills and evaluate whether to pursue an expansion at a given landfill based on estimated future disposal volume, disposal prices, construction and operating costs, remaining airspace and likelihood of obtaining an expansion permit. We are seeking expansion permits at 15 of our landfills that meet the expansion criteria outlined in the Critical Accounting Estimates and Assumptions — Landfills section below. Although no assurances can be made that all future expansions will be permitted or permitted as designed, the weighted average remaining landfill life for all owned or operated landfills is approximately 39 years when considering remaining permitted airspace, expansion airspace and projected annual disposal volume.
The number of landfills owned or operated as of December 31, 2025, segregated by their estimated operating lives based on remaining permitted and expansion airspace and projected annual disposal volume, was as follows:
# of Landfills
0 to 5 years24
6 to 10 years23
11 to 20 years55
21 to 40 years61
41+ years94
Total257(a)(a) Of the 257 landfills, 219 are owned, 26 are operated under lease agreements and 12 are operated under other contractual agreements. For the landfills not owned, we are usually responsible for final capping, closure and post-closure obligations.Landfill Assets — We capitalize various costs that we incur to prepare a landfill to accept waste. These costs generally include expenditures for land (including the landfill footprint and required landfill buffer property), permitting, excavation, liner material and installation, landfill leachate collection systems, landfill gas collection systems, environmental monitoring equipment for groundwater and landfill gas, directly related engineering, capitalized interest, and on-site road construction and other capital infrastructure costs. The cost basis of our landfill assets also includes estimates of future costs associated with landfill final capping, closure and post-closure activities, which are discussed further below.57
Table of Contents
The changes to the cost basis of our landfill assets and accumulated landfill airspace depletion for the year ended December 31, 2025 are reflected in the table below (in millions):
Accumulated
Net Book
Cost Basis of
Landfill Airspace
Value of
Landfill Assets Depletion Landfill AssetsDecember 31, 2024
$20,273
$(12,259)
$8,014Capital additions
832
—
832
Asset retirement obligations incurred and capitalized
86
—
86Depletion of landfill airspace
—
(898)(898)Foreign currency translation
57(26)31Asset retirements and other adjustments
(72)239167
December 31, 2025
$21,176
$(12,944)
$8,232As of December 31, 2025, we estimate that we will spend approximately $874 million in 2026, and approximately $1.8 billion in 2027 and 2028 combined, for the construction and development of our landfill assets. The specific timing of landfill capital spending is dependent on future events and spending estimates are subject to change due to fluctuations in landfill waste volumes, changes in environmental requirements and other factors impacting landfill operations.Landfill and Environmental Remediation Liabilities — As we accept waste at our landfills, we incur significant asset retirement obligations, which include liabilities associated with landfill final capping, closure and post-closure activities. These liabilities are accounted for in accordance with authoritative guidance on accounting for asset retirement obligations and are discussed in Note 2 to the Consolidated Financial Statements. We also have liabilities for the remediation of properties that have incurred environmental damage, which generally was caused by operations or for damage caused by conditions that existed before we acquired operations or a site. We recognize environmental remediation liabilities when we determine that the liability is probable and the cost for the likely remedy can be reasonably estimated.The changes to landfill and environmental remediation liabilities for the year ended December 31, 2025 are reflected in the table below (in millions):
Environmental
Landfill RemediationDecember 31, 2024
$3,057
$222Obligations incurred and capitalized
86
—
Obligations settled
(181)
(29)Interest accretion
142
—Revisions in estimates217
38Acquisitions, divestitures and other adjustments
(16)
—December 31, 2025
$3,305
$231
Landfill Operating Costs — The following table summarizes our landfill operating costs for the year ended December 31 (in millions):
2025
2024Interest accretion on landfill and environmental remediation liabilities
$142
$133Leachate and methane collection and treatment
235230Landfill remediation costs and discount rate adjustments to environmental remediation liabilities and recovery assets
2418Other landfill site costs
148143Total landfill operating costs
$549
$52458
Table of ContentsDepletion of Landfill Airspace — Depletion of landfill airspace, which is included as a component of depreciation, depletion and amortization expenses, includes the following:
● the depletion of landfill capital costs, including (i) costs that have been incurred and capitalized and (ii) estimated future costs for landfill development and construction required to develop our landfills to their remaining permitted and expansion airspace; and
● the depletion of asset retirement costs arising from landfill final capping, closure and post-closure obligations, including (i) costs that have been incurred and capitalized and (ii) projected asset retirement costs.
Depletion expense is recorded on a units-of-consumption basis, applying cost as a rate per ton. The rate per ton is calculated by dividing each component of the depletable basis of a landfill (net of accumulated depletion) by the number of tons needed to fill the corresponding asset’s remaining permitted and expansion airspace. Landfill capital costs and closure and post-closure asset retirement costs are generally incurred to support the operation of the landfill over its entire operating life and are, therefore, depleted on a per-ton basis using a landfill’s total permitted and expansion airspace. Final capping asset retirement costs are related to a specific final capping event and are, therefore, depleted on a per-ton basis using each discrete final capping event’s estimated permitted and expansion airspace. Accordingly, each landfill has multiple per-ton depletion rates.The following table presents our landfill airspace depletion expense on a per-ton basis for the year ended December 31:
2025
2024Depletion of landfill airspace (in millions)
$898
$795Tons received, net of redirected waste (in millions)
129125
Average landfill airspace depletion expense per ton
$6.96
$6.36Different per-ton depletion rates are applied at each of our 257 landfills, and per-ton depletion rates vary significantly from one landfill to another due to (i) inconsistencies that often exist in construction costs and provincial, state and local regulatory requirements for landfill development and landfill final capping, closure and post-closure activities and (ii) differences in the cost basis of landfills that we develop versus those that we acquire. Accordingly, our landfill airspace depletion expense measured on a per-ton basis can fluctuate due to changes in the mix of volumes we receive across the Company each year.
59
Table of ContentsLiquidity and Capital ResourcesThe Company consistently generates annual cash flow from operations that meets and exceeds our working capital needs, allows for payment of our dividends, investment in the business through capital expenditures and tuck-in acquisitions and funding of strategic sustainability growth investments. We continually monitor our actual and forecasted cash flows, our liquidity and our capital resources, enabling us to plan for our present needs and fund unbudgeted business requirements that may arise during the year. The Company believes that its investment grade credit ratings, diverse investor base, large value of unencumbered assets and modest leverage enable it to obtain adequate financing, and refinance upcoming maturities, as necessary to meet its ongoing capital, operating, strategic and other liquidity requirements. We also have the ability to manage liquidity during periods of significant financial market disruption through temporary modification of our capital expenditure and share repurchase plans.Summary of Contractual ObligationsThe following table summarizes our significant contractual obligations as of December 31, 2025 (other than recorded obligations related to liabilities associated with environmental remediation costs and non-cancelable operating lease obligations, which are discussed further in Notes 3 and 7 to the Consolidated Financial Statements, respectively) and the anticipated effect of these obligations on our liquidity in future years (in millions):
2026202720282029
2030
ThereafterTotal
Recorded Obligations:
Final capping, closure and post-closure liabilities (a)
$186
$237
$224
$193
$313
$4,200
$5,353Debt payments (b)
1,8021,9971,9682,1061,67213,51823,063Unrecorded Obligations:
Interest on debt (c)
942
838
7837126294,233
8,137Estimated unconditional purchase obligations (d)
26923413078635941,368
Anticipated liquidity impact as of December 31, 2025
$3,199
$3,306
$3,105
$3,089
$2,677
$22,545
$37,921
(a) Includes liabilities for final capping, closure and post-closure costs recorded in our Consolidated Balance Sheet as of December 31, 2025, without the impact of discounting and inflation. Our recorded liabilities for final capping, closure and post-closure costs will increase as we continue to place additional tons within the permitted airspace at our landfills.(b) These amounts represent the scheduled principal payments based on their contractual maturities related to our long-term debt and financing leases, excluding interest. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding our debt obligations.(c) Interest on our fixed-rate debt was calculated based on contractual rates and interest on our variable-rate debt was calculated based on interest rates as of December 31, 2025. As of December 31, 2025, we had $233 million of accrued interest related to our debt obligations.(d) Our obligations represent purchase commitments from which we expect to realize an economic benefit in future periods. We have also made certain guarantees that we do not expect to materially affect our current or future financial position, results of operations or liquidity. See Note 10 to the Consolidated Financial Statements for discussion of the nature and terms of our unconditional purchase obligations and guarantees.60
Table of ContentsSummary of Cash and Cash Equivalents, Restricted Funds and Debt Obligations
The following is a summary of our cash and cash equivalents, restricted funds and debt balances as of December 31 (in millions):
2025
2024Cash and cash equivalents
$201
$414Restricted funds:
Insurance reserves
$472
$385Final capping, closure, post-closure and environmental remediation funds
140
128Other
10—Total restricted funds (a)
$622
$513Debt:
Current portion
$711
$1,359Long-term portion
22,19622,541Total debt
$22,907
$23,900(a)As of December 31, 2025 and 2024, $109 million and $100 million, respectively, of these account balances was included in other current assets in our Consolidated Balance Sheets.
Debt — We use long-term borrowings in addition to the cash we generate from operations as part of our overall financial strategy to support and grow our business. We primarily use senior notes and tax-exempt bonds to borrow on a long-term basis, but we also use other instruments and facilities, when appropriate. The components of our borrowings as of December 31, 2025 are described in Note 6 to the Consolidated Financial Statements.
As of December 31, 2025, we had approximately $3.7 billion of debt maturing within the next 12 months, including (i) $1.8 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (ii) $1.1 billion of short-term borrowings under our commercial paper program (net of related discount on issuance); (iii) $223 million of 7.1% senior notes that mature in August 2026; (iv) $364 million of 2.6% Canadian senior notes that mature in September 2026 and (v) $200 million of other debt with scheduled maturities within the next 12 months. As of December 31, 2025, we have classified $3.0 billion of debt maturing in the next 12 months as long-term because we have the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity under our $3.5 billion long-term U.S. and Canadian revolving credit facility (“$3.5 billion revolving credit facility”). The remaining $711 million of debt maturing in the next 12 months is classified as current obligations.We have credit lines in place to support our liquidity and financial assurance needs. The following table summarizes our outstanding letters of credit, categorized by type of facility as of December 31 (in millions):
2025
2024Revolving credit facility (a)
$227
$224Other letter of credit lines (b)
920
862
$1,147
$1,086
(a) As of December 31, 2025 and 2024, we had an unused and available credit capacity of $2.2 billion and $2.1 billion, respectively.
(b) As of December 31, 2025, these other letter of credit lines are uncommitted with terms extending through December 2029.Guarantor Financial InformationWM Holdings has fully and unconditionally guaranteed all of Waste Management, Inc.’s (“WMI’s”) senior indebtedness. WMI has fully and unconditionally guaranteed all of WM Holdings’ senior indebtedness. None of WMI’s
61Table of Contentsother subsidiaries have guaranteed any of WMI’s or WM Holdings’ debt. In lieu of providing separate financial statements for the subsidiary issuer and guarantor (WMI and WM Holdings), we have presented the accompanying supplemental summarized combined balance sheet and income statement information for WMI and WM Holdings on a combined basis after elimination of intercompany transactions between WMI and WM Holdings and amounts related to investments in any subsidiary that is a non-guarantor (in millions):
December 31, 2025Balance Sheet Information:
Current assets
$44Noncurrent assets
13Current liabilities
738Noncurrent liabilities:
Advances due to affiliates
18,160Other noncurrent liabilities
19,733
Year Ended
December 31, 2025Income Statement Information:
Revenue
$
—
Operating income
—Net loss
(674)
Summary of Cash Flow Activity
The following is a summary of our cash flows for the year ended December 31 (in millions):
2025
2024Net cash provided by operating activities
$6,043
$5,390
Net cash used in investing activities
$(3,566)
$
(10,601)Net cash provided by (used in) financing activities
$(2,673)
$5,155
Net Cash Provided by Operating Activities — Our operating cash flows increased $653 million in 2025 compared to 2024, primarily due to (i) higher earnings in our Collection and Disposal businesses; (ii) contributions from our recent acquisitions and (iii) lower cash tax payments. This increase was partially offset by (i) higher cash interest payments primarily due to additional debt incurred to fund our acquisition of Stericycle; (ii) higher annual incentive compensation payments and (iii) unfavorable changes in working capital, net of effects from acquisitions and divestitures. We continue to execute well in optimizing working capital, particularly in the reduction of days sales outstanding for our Healthcare Solutions business and alignment of our days-to-pay measure with contract terms, though overall working capital changes have been pressured by the Stericycle acquisition.Net Cash Used in Investing Activities — The most significant items affecting the comparison of our investing cash flows for the periods presented are summarized below:● Acquisitions — Our spending on acquisitions was $404 million and $7,503 million in 2025 and 2024, respectively, of which $395 million and $7,488 million, respectively, are considered cash used in investing activities. The remaining spend is cash used in financing activity related to the timing of contingent consideration paid. Excluding our acquisition of Stericycle in 2024, substantially all of the remaining acquisitions are related to our solid waste and recycling businesses.
● Capital Expenditures — We used $3,227 million and $3,231 million 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 our sustainability growth projects as we move from peak construction of this portfolio into a period where we will harvest strong returns on these businesses . The decrease in capital spending was mostly offset by increased capital expenditures to support the business and incremental spend within our Healthcare Solutions segment driven by the timing of the acquisition in late 2024.
62Table of Contents● Divestitures — Proceeds from divestitures of businesses and other assets, net of cash divested, were $121 million and $158 million in 2025 and 2024, respectively. Proceeds in 2025 primarily related to the sale of our Healthcare Solutions segment’s Spain and Portugal subsidiaries. The remaining 2025 and 2024 proceeds were from the sale of certain non-strategic assets.
● Other, Net — Our spending within other, net was $65 million and $40 million in 2025 and 2024, respectively. During 2025 and 2024, we used $56 million and $4 million, respectively, of cash from restricted cash and cash equivalents to invest in available-for-sale securities. During 2024, we used $33 million to make initial cash payments associated with a low-income housing investment.Net Cash Provided by (Used in) Financing Activities — The most significant items affecting the comparison of our financing cash flows for the periods presented are summarized below:
● Debt Borrowings (Repayments) — The following summarizes our cash borrowings and repayments of debt for the year ended December 31 (in millions):
2025
2024Borrowings :
Commercial paper program
$20,162
$12,678Term loan (a)
—
5,200Senior notes
—
6,650
Tax-exempt bonds
252
50
$20,414
$24,578Repayments :
Commercial paper program
$(20,374)
$(12,319)Term loan (a)
—
(5,200)Senior notes
(922)
(156)Tax-exempt bonds(298)(60)Other debt(153)
(135)
$
(21,747)$
(17,870)Net cash borrowings (repayments)
$(1,333)
$6,708
(a) In October 2024, we drew $5.2 billion of borrowings under a term credit agreement that were applied to funding our acquisition of Stericycle. In November 2024, we repaid all outstanding borrowings and contemporaneously terminated the term credit agreement.Refer to Note 6 to the Consolidated Financial Statements for additional information related to our debt borrowings and repayments.● Common Stock Repurchase Program — For the periods presented, all share repurchases have been made in accordance with financial plans approved by our Board of Directors. No share repurchases were made in 2025. During 2024, we allocated $262 million of available cash to common stock repurchases. See Note 13 to the Consolidated Financial Statements for additional information about our share repurchase activity.
We announced in December 2025 that our Board of Directors has authorized up to $3.0 billion in future share repurchases, exclusive of fees, commissions and taxes. This new authorization supersedes and replaces remaining authority under the prior Board of Directors’ authorization for share repurchases announced in December 2023. The amount of future share repurchases executed under our Board of Directors’ authorization is determined in management’s discretion, based on various factors, including our leverage level, net earnings, financial condition and cash required for future business plans, growth and acquisitions.
● Cash Dividends — For the periods presented, all dividends have been declared by our Board of Directors. Cash dividends declared and paid were $1.3 billion in 2025, or $3.30 per common share and $1.2 billion in 2024, or $3.00 per common share.
In December 2025, we announced that our Board of Directors expects to increase the quarterly dividend from $0.825 to $0.945 per share for dividends declared in 2026. However, all future dividend declarations are at the
63Table of Contentsdiscretion of the Board of Directors and depend on various factors, including our leverage level, net earnings, financial condition, cash required for future business plans, growth and acquisitions and other factors the Board of Directors may deem relevant.
● Exercise of Common Stock Options — The exercise of common stock options generated financing cash inflows of $61 million and $53 million from the exercise of 676,000 and 693,000 of employee stock options during 2025 and 2024, respectively.
● Other, Net — During 2024, we acquired the remaining minority interests in a business engaged in accelerating film and plastic wrap recycling capabilities for $41 million.Free Cash Flow
We are presenting free cash flow, which is a non-GAAP measure of liquidity, in our disclosures because we use this measure in the evaluation and management of our business. We define free cash flow as net cash provided by operating activities, less capital expenditures, plus proceeds from divestitures of businesses and other assets, net of cash divested. We believe it is indicative of our ability to pay our quarterly dividends, repurchase common stock, fund acquisitions and other investments and, in the absence of refinancings, to repay our debt obligations. Free cash flow is not intended to replace net cash provided by operating activities, which is the most comparable GAAP measure. We believe free cash flow gives investors useful insight into how we view our liquidity, but the use of free cash flow as a liquidity measure has material limitations because it excludes certain expenditures that are required or that we have committed to, such as declared dividend payments and debt service requirements.
Our calculation of free cash flow and reconciliation to net cash provided by operating activities is shown in the table below for the year ended December 31 (in millions), and may not be calculated the same as similarly-titled measures presented by other companies:
2025
2024Net cash provided by operating activities
$6,043
$5,390Capital expenditures to support the business
(2,594)
(2,281)Capital expenditures - sustainability growth investments (a)
(633)
(950)Total capital expenditures
(3,227)(3,231)Proceeds from divestitures of businesses and other assets, net of cash divested
121158Free cash flow
$2,937
$2,317
(a) These growth investments are intended to further our sustainability leadership position by increasing recycling volumes and growing RNG generation and we expect they will deliver circular solutions for our customers and drive environmental value to the communities we serve.Critical Accounting Estimates and AssumptionsIn preparing our financial statements, we make numerous estimates and assumptions that affect the accounting for and recognition and disclosure of assets, liabilities, equity, revenues and expenses. We must make these estimates and assumptions because certain information that we use is dependent on future events, cannot be calculated with precision from available data or simply cannot be calculated. In some cases, these estimates are difficult to determine, and we must exercise significant judgment. In preparing our financial statements, the most difficult, subjective and complex estimates and the assumptions that present the greatest amount of uncertainty relate to our accounting for landfills, environmental remediation liabilities, long-lived asset impairments, intangible asset impairments and the fair value of assets and liabilities acquired in business combinations. Each of these items is discussed in additional detail below and in Note 2 to the Consolidated Financial Statements. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements.
64Table of ContentsLandfills
Accounting for landfills requires that significant estimates and assumptions be made regarding (i) the cost to construct and develop each landfill asset; (ii) the estimated fair value of final capping, closure and post-closure asset retirement obligations, which must consider both the expected cost and timing of these activities and (iii) the determination of each landfill’s remaining permitted and expansion airspace.
Landfill Costs — We estimate the total cost to develop each of our landfill sites to its remaining permitted and expansion airspace. This estimate includes such costs as landfill liner material and installation, excavation for airspace, landfill leachate collection systems, landfill gas collection systems, environmental monitoring equipment for groundwater and landfill gas, directly related engineering, capitalized interest, on-site road construction and other capital infrastructure costs. Additionally, landfill development includes all land purchases for the landfill footprint and landfill buffer property. The projection of these landfill costs is dependent, in part, on future events. The remaining depletable basis of each landfill includes costs to develop a site to its remaining permitted and expansion airspace and includes amounts previously expended and capitalized, net of accumulated airspace depletion, and projections of future purchase and development costs.
Final Capping Costs — We estimate the cost for each final capping event based on the area to be capped and the capping materials and activities required. The estimates also consider when these costs are anticipated to be paid and factor in inflation and discount rates. Our engineering personnel allocate landfill final capping costs to specific final capping events and the capping costs are depleted as waste is disposed of at the landfill. We review these costs annually, or more often if significant facts change. Changes in estimates, such as timing or cost of construction, for final capping events immediately impact the required liability and the corresponding asset. When the change in estimate relates to a fully consumed landfill, the adjustment to the asset must be depleted immediately through expense. When the change in estimate relates to a final capping event at a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace depletion.
Closure and Post-Closure Costs — We base our estimates for closure and post-closure costs on our interpretations of permit and regulatory requirements for closure and post-closure monitoring and maintenance. The estimates for landfill closure and post-closure costs also consider when the costs are anticipated to be paid and factor in inflation and discount rates. The possibility of changing legal and regulatory requirements and the forward-looking nature of these types of costs make any estimation or assumption less certain. Changes in estimates for closure and post-closure events immediately impact the required liability and the corresponding asset. When the change in estimate relates to a fully consumed landfill, the adjustment to the asset must be depleted immediately through expense. When the change in estimate relates to a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace depletion.
Remaining Permitted Airspace — Our engineers, in consultation with third-party engineering consultants and surveyors, are responsible for determining remaining permitted airspace at our landfills. The remaining permitted airspace is determined by an annual survey, which is used to compare the existing landfill topography to the expected final landfill topography.
Expansion Airspace — We also include currently unpermitted expansion airspace in our estimate of remaining permitted and expansion airspace in certain circumstances. First, for unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, we must believe that obtaining the expansion permit is likely. Second, we must generally expect the initial expansion permit application to be submitted within one year and the final expansion permit to be received within five years, in addition to meeting the following criteria:
● Personnel are actively working on the expansion of an existing landfill, including efforts to obtain land use and local, state or provincial approvals;● We have a legal right to use or obtain land to be included in the expansion plan;
● There are no significant known technical, legal, community, business, or political restrictions or similar issues that could negatively affect the success of such expansion; and65
Table of Contents● Financial analysis has been completed based on conceptual design, and the results demonstrate that the expansion meets Company criteria for investment.
These criteria are evaluated by our field-based engineers, accountants, managers and others to identify potential obstacles to obtaining the permits. Once the unpermitted airspace is included, our policy provides that airspace may continue to be included in remaining permitted and expansion airspace even if certain of these criteria are no longer met as long as we continue to believe we will ultimately obtain the permit, based on the facts and circumstances of a specific landfill. In these circumstances, continued inclusion must be approved through a landfill-specific review process that includes approval by our Chief Financial Officer on a quarterly basis.
When we include the expansion airspace in our calculations of remaining permitted and expansion airspace, we also include the projected costs for development, as well as the projected asset retirement costs related to final capping, closure and post-closure of the expansion in the depletable basis of the landfill.
Once the remaining permitted and expansion airspace is determined in cubic yards, an airspace utilization factor (“AUF”) is established to calculate the remaining permitted and expansion capacity in tons. The AUF is established using the measured density obtained from previous annual surveys and is then adjusted to account for future settlement. The amount of settlement that is forecasted will consider several site-specific factors including current and projected mix of waste type, initial and projected waste density, estimated number of years of life remaining, depth of underlying waste, anticipated access to moisture through precipitation or recirculation of landfill leachate and operating practices. In addition, the initial selection of the AUF is subject to a subsequent multi-level review by our engineering group and the AUF used is reviewed on a periodic basis and revised as necessary. Our historical experience generally indicates that the impact of settlement at a landfill is greater later in the life of the landfill when the waste placed at the landfill approaches its highest point under the permit requirements.
After determining the costs and remaining permitted and expansion capacity at each of our landfills, we determine the per ton rates that will be expensed as waste is received and deposited at the landfill by dividing the costs by the corresponding number of tons. We calculate per ton depletion rates for each landfill for assets associated with each final capping event, for assets related to closure and post-closure activities and for all other costs capitalized or to be capitalized in the future. These rates per ton are updated annually, or more often, as significant facts change.
It is possible that actual results, including the amount of costs incurred, the timing of final capping, closure and post-closure activities, our airspace utilization or the success of our expansion efforts could ultimately turn out to be significantly different from our estimates and assumptions. To the extent that such estimates, or related assumptions, prove to be significantly different than actual results, lower earnings may be experienced due to higher depletion rates or higher expenses; or higher earnings may result if the opposite occurs. Most significantly, if it is determined that expansion capacity should no longer be considered in calculating the recoverability of a landfill asset, we may be required to recognize an asset impairment or incur significantly higher depletion expense. If at any time management makes the decision to abandon the expansion effort, the capitalized costs related to the expansion effort are expensed immediately.
Environmental Remediation Liabilities
A significant portion of our operating costs and capital expenditures could be characterized as costs of environmental protection. The nature of our operations, particularly with respect to the construction, operation and maintenance of our landfills subjects us to an array of laws and regulations relating to the protection of the environment. Under current laws and regulations, we may have liabilities for environmental damage caused by our operations, or for damage caused by conditions that existed before we acquired a site. In addition to remediation activity required by state or local authorities, such liabilities include potentially responsible party (“PRP”) investigations. The costs associated with these liabilities can include settlements, certain legal and consultant fees, as well as incremental internal and external costs directly associated with site investigation and clean up.Where it is probable that a liability has been incurred, we estimate costs required to remediate sites based on site-specific facts and circumstances. We routinely review and evaluate sites that require remediation and determine our estimated cost for the likely remedy based on a number of estimates and assumptions. Next, we review the same type of
66Table of Contentsinformation with respect to other named and unnamed PRPs. Estimates of the costs for the likely remedy are then either developed using our internal resources or by third-party environmental engineers or other service providers. Internally developed estimates are based on:● Management’s judgment and experience in remediating our own and unrelated parties’ sites;
● Information available from regulatory agencies as to costs of remediation;
● The number, financial resources and relative degree of responsibility of other PRPs who may be liable for remediation of a specific site; and
● The typical allocation of costs among PRPs, unless the actual allocation has been determined.
Refer to Note 10 to the Consolidated Financial Statements for additional information on our environmental liabilities.
Fair Value of Nonfinancial Assets and Liabilities
Significant estimates are made in determining the fair value of long-lived tangible and intangible assets (i.e., property and equipment, intangible assets and goodwill) during the impairment evaluation process. In addition, the majority of assets acquired and liabilities assumed in a business combination are required to be recognized at fair value under the relevant accounting guidance.
Fair value is computed using several factors, including projected future operating results, economic projections, anticipated future cash flows, comparable marketplace data and the cost of capital. There are inherent uncertainties related to these factors and to our judgment in applying them in our analysis. However, we believe our methodology for estimating the fair value of our reporting units is reasonable.
Property and Equipment, Including Landfills and Definite-Lived Intangible Assets — We monitor the carrying value of our long-lived assets for potential impairment on an ongoing basis and test the recoverability of such assets generally using significant unobservable (“Level 3”) inputs whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. These events or changes in circumstances, including management decisions pertaining to such assets, are referred to as impairment indicators. If an impairment indicator occurs, we perform a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. If cash flows cannot be separately and independently identified for a single asset, we will determine whether an impairment has occurred for the group of assets for which we can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset or asset group to its carrying value and the difference is recorded in the period that the impairment indicator occurs. Fair value is generally determined by considering (i) internally developed discounted projected cash flow analysis of the asset or asset group; (ii) third-party valuations and/or (iii) information available regarding the current market for similar assets. Estimating future cash flows requires significant judgment and projections may vary from the cash flows eventually realized, which could impact our ability to accurately assess whether an asset has been impaired.
The assessment of impairment indicators and the recoverability of our capitalized costs associated with landfills and related expansion projects require significant judgment due to the unique nature of the waste industry, the highly regulated permitting process and the sensitive estimates involved. During the review of a landfill expansion application, a regulator may initially deny the expansion application although the expansion permit is ultimately granted. In addition, management may periodically divert waste from one landfill to another to conserve remaining permitted landfill airspace, or a landfill may be required to cease accepting waste, prior to receipt of the expansion permit. However, such events occur in the ordinary course of business in the waste industry and do not necessarily result in impairment of our landfill assets because, after consideration of all facts, such events may not affect our belief that we will ultimately obtain the expansion permit. As a result, our tests of recoverability, which generally make use of a probability-weighted cash flow estimation approach, may indicate that no impairment loss should be recorded.67Table of Contents
Indefinite-Lived Intangible Assets, Including Goodwill — At least annually using a measurement date of October 1, and more frequently if warranted, we assess the indefinite-lived intangible assets including the goodwill of our reporting units for impairment using Level 3 inputs.We may perform either a qualitative or quantitative assessment; however, if a qualitative assessment is performed and we determine that the fair value of a reporting unit is more likely than not to be less than its carrying amount, a quantitative assessment is performed. The quantitative assessment compares the estimated fair value of a reporting unit to its carrying amount, including goodwill. An impairment charge is recognized if the reporting unit’s estimated fair value was less than its carrying amount. Fair value is typically estimated using an income approach using Level 3 inputs. However, when appropriate, we may also use a market approach. The income approach is based on the long-term projected future cash flows of the reporting units. We discount the estimated cash flows to present value using a weighted average cost of capital that considers factors such as market assumptions, the timing of the cash flows and the risks inherent in those cash flows. We believe that this approach is appropriate because it provides a fair value estimate based upon the reporting units’ expected long-term performance considering the economic and market conditions that generally affect our business. The market approach estimates fair value by measuring the aggregate market value of publicly-traded companies with similar characteristics to our business as a multiple of their reported earnings. We then apply that multiple to the reporting units’ earnings to estimate their fair values. We believe that this approach may also be appropriate in certain circumstances because it provides a fair value estimate using valuation inputs from entities with operations and economic characteristics comparable to our reporting units.
Reporting units within our Healthcare Solutions segment are more sensitive than others to changes in estimated fair values, specifically changes driven by revenue growth, cost and discount rate assumptions, as compared to our other reporting units due to the fact that the Stericycle business comprising these reporting units was recently acquired. As such, the reporting units within our Healthcare Solutions segment have a greater risk of impairment should their operations or market conditions experience a significant downturn.
Acquisitions — In accordance with the acquisition method of accounting, the purchase price paid for an acquisition is allocated to the assets and liabilities acquired based upon their estimated fair values as of the acquisition date, with the excess of the purchase price over the net assets acquired recorded as goodwill. When we are in the process of valuing all of the assets and liabilities acquired in an acquisition, there can be subsequent adjustments to our estimates of fair value and resulting preliminary purchase price allocation. Generally, the valuation of our acquired assets and liabilities rely on complex estimates and assumptions.Acquisition-date fair value estimates are revised as necessary if, and when, additional information regarding these contingencies becomes available to further define and quantify assets acquired and liabilities assumed. Subsequent to finalization of purchase accounting, these revisions are accounted for as adjustments to income from operations. All acquisition-related transaction costs are expensed as incurred. See Note 17 to the Consolidated Financial Statements for additional information related to our acquisitions.
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net . See Note 11 to the Consolidated Financial Statements for additional information related to Asset Impairments and Unusual Items.
Inflation
Variability in economic conditions, including inflation, interest rates, employment trends, and supply chain reliability, can create risk and uncertainty in financial outlook. We take proactive steps to recover and mitigate inflationary cost pressures through our overall pricing efforts and by managing our costs through efficiency, labor productivity, and investments in technology to automate certain aspects of our business. These efforts may not be successful for various reasons including the pace of inflation, operating cost inefficiencies, market responses, and contractual limitations, such as the timing lag in our ability to recover increased costs under certain contracts that are tied to a price escalation index with a lookback provision.
Refer to Item 1A. Risk Factors for further discussion.68
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