Waste Management (WM) Q3 2025 earnings summary

Executive summary

• Q3 2025 revenue rose 14.9% year-over-year to $6.44 billion, driven by acquisitions (notably Stericycle), higher yield in Collection and Disposal, and increased landfill, renewable energy, industrial collection, and recycling volumes, partially offset by lower residential collection and reduced recycled commodity prices.

• Achieved record Operating EBITDA margin of 30.6% in Q3, with over 15% Operating EBITDA growth and nearly 33% free cash flow growth year-over-year.

• Integration of healthcare solutions (Stericycle) progressed ahead of plan, with synergy capture and cross-selling exceeding expectations and enhancing service breadth.

• Sustainability businesses delivered strong results despite a 35% decline in recycled commodity prices; recycling EBITDA up 18%, and four new sustainability projects commenced operations.

• Investments in technology, automation, and fleet are yielding operational efficiencies and lower costs.

Financial highlights

• Q3 Operating EBITDA margin reached 30.6%, the highest in company history; legacy business margin at 32%.

• Free cash flow for the first nine months of 2025 grew 13.5% to $2.11 billion; Q3 free cash flow was $821 million, up from $618 million in Q3 2024.

• Capital spending YTD totaled $2.34 billion, tracking to plan and focused on trucks, equipment, landfills, and healthcare solutions.

• Returned $1 billion to shareholders in dividends and allocated over $400 million to acquisitions YTD.

• Leverage ratio at quarter-end was 3.3x, targeting 2.5x-3x by mid-2026.

Outlook and guidance

• Full-year revenue expected at the low end of prior guidance due to weaker recycled commodity prices and moderated healthcare solutions growth.

• Margin guidance raised to 29.6%-30.2% for the year, with confidence in achieving strong earnings and cash flow growth in 2025 and into 2026.

• Early 2026 free cash flow outlook approaching $3.8 billion, driven by harvesting returns from recent investments and reduced CapEx.

• Share repurchases remain suspended until leverage returns to targeted levels, expected by Q2 2026.

• Continued confidence in achieving renewable energy and sustainability EBITDA targets, with recycling business recovery expected as commodity prices rebound.