Waste Management (NYSE:WM) executives told investors the company delivered “outstanding results” in 2025, citing record cost performance, margin expansion in the legacy business, and accelerating cash generation as operational efficiencies and sustainability investments gained traction.
2025 performance: record cost metrics and stronger cash generation
CEO Jim Fish said WM produced a record performance in operating expenses as a percent of revenue and expanded full-year Operating EBITDA margin by 150 basis points in the legacy business. He attributed the results to disciplined pricing, operational execution, and the continued scaling of sustainability businesses alongside progress integrating the Healthcare Solutions segment.
For the full year, Morris said WM finished at 59.5% operating expenses as a percent of revenue—“the first time in company history” the metric was below 60% for the year—supported by repair and maintenance savings and labor improvements. He pointed to accelerated investment in new trucks over the past three years, fleet optimization, more streamlined maintenance, and route automation and resource planning tools that improved utilization and reduced unplanned repairs.
On labor, Morris noted driver turnover reached its lowest level of the year at 15.7% in the fourth quarter. Management also emphasized the benefits of its “connected truck platform,” which provides real-time visibility into sequencing, downtime, and efficiency and can support revenue opportunities by enabling right-sizing of service levels.
EVP and CFO David Reed said Operating EBITDA margin expanded 40 basis points to 30.1% for 2025, overcoming a 140-basis-point headwind from the Healthcare Solutions acquisition and the expiration of alternative fuel tax credits. Normalized for those headwinds, Reed said the legacy business delivered 180 basis points of margin expansion, driven by Collection and Disposal and additional contributions from Recycling automation benefits, growth in renewable natural gas, lower risk management costs, and effects from lower commodity pricing in the Recycling brokerage business.
WM reported cash flow from operations grew more than 12% to $6.04 billion in 2025, while free cash flow rose nearly 27% to $2.94 billion. Reed said capital spending totaled just under $2.6 billion to support the business, plus $633 million of sustainability growth investments. The company also paid $1.3 billion in dividends, reduced debt by $1 billion, and ended the year with leverage of 3.1x, with management expecting leverage to return to its targeted 2.5x to 3x range during 2026. WM also spent more than $400 million on tuck-in acquisitions during 2025.
Healthcare Solutions: integration progress, pricing realization, and SG&A reductions
Fish described 2025 as a year of “teamwork, focus, and execution” in Healthcare Solutions, saying service delivery metrics and customer service scores improved to levels above the legacy business. He said customer call volume has been trending down and customer-facing processes and invoices have been standardized and enhanced, contributing to higher customer satisfaction. Fish also said the company received acknowledgement from a major Healthcare Solutions customer for improvements in invoicing.
Reed provided additional detail on cost reductions: fourth-quarter Healthcare Solutions SG&A was 20.8% of revenue, an improvement of 350 basis points from the prior-year period, and full-year total company SG&A was 10.4% of revenue. Reed said WM is “on track” to get total company SG&A below 10% in the near term.
In Q&A, management said it expects better price realization in Healthcare Solutions as credit memos—which have diluted pricing—begin to trend down after peaking in the fourth quarter. Fish said WM is expecting 4.2% price in Healthcare Solutions in 2026, with 3% top-line growth reflecting lost accounts that are expected to anniversary largely in the back half of 2026. He also reiterated confidence in synergy targets, noting the company initially guided to $80 million to $100 million of SG&A synergies and finished above the top end of that range, while maintaining comfort with the original $300 million synergy goal, which includes $50 million of cross-selling.
Management emphasized that cross-selling benefits may appear in both Healthcare Solutions and the Collection and Disposal business. Morris said integrating Healthcare Solutions into WM’s existing field operations management structure should help extend operational improvements such as routing and logistics efficiencies, driver turnover improvement, asset rationalization, and network optimization.
Sustainability investments: Recycling and renewable natural gas expansion
WM executives highlighted continued investment in sustainability platforms. Fish said the company commissioned seven new renewable natural gas (RNG) facilities in 2025 and completed automation upgrades at five Recycling facilities while adding Recycling facilities in four new markets.
Fish said the Recycling segment delivered more than 22% Operating EBITDA growth despite nearly 20% lower commodity prices during 2025, which he cited as evidence of the value of WM’s Recycling investments.
During Q&A, management discussed progress toward sustainability earnings targets. Executives said the bridge from an incremental $700 million of sustainability growth EBITDA to the $760 million to $800 million estimate presented previously was primarily driven by lower assumed recycled commodity prices (noting $125 per ton previously versus 70 in the updated view) and differences in operating costs, particularly electricity costs. Management also said the payback period for RNG projects remains attractive, though Fish noted projects previously discussed as 2.5 to 3 years may now be 3 to 4 years.
On RNG commercialization, WM said 60% of volumes were contracted for 2026, and for the remaining uncontracted volumes, expectations were based on RIN pricing in the $2.30 to $2.40 range. Management also said it was confident voluntary markets could absorb anticipated volumes, pointing to opportunities outside the U.S. market and ongoing discussions with utility companies as regulations evolve.
For 2026, Reed said WM expects four Recycling facilities and six RNG facilities to come online. Management also disclosed sustainability growth EBITDA guidance of $235 million to $255 million for 2026, with one executive describing the mix as about 60% renewable energy and 40% Recycling, including royalty.
2026 guidance and shareholder returns
Management guided to 2026 Operating EBITDA of $8.15 billion to $8.25 billion. Reed said the 2026 guidance excludes projected accretion expense of approximately $150 million as part of a classification update intended to improve comparability with industry peers. WM also expects an effective tax rate of about 24% and an end-of-year share count of roughly 402 million.
Fish said WM’s guidance implies Operating EBITDA growth of 6.2% at the midpoint, or 7.4% when normalized for wildfire cleanup volumes in 2025. Executives repeatedly cited wildfire activity as a meaningful comparison item, with Fish noting $82 million of EBITDA impact in 2025 from wildfire-related volume and describing a roughly 50-basis-point headwind on 2026 volume from the absence of those one-time volumes.
Free cash flow is expected to grow to $3.8 billion at the midpoint, nearly 30% growth, with WM projecting Operating EBITDA to free cash flow conversion above 46%. Reed said 2026 capex is expected to be $2.65 billion to $2.75 billion, inclusive of about $200 million directed to high-return sustainability projects, including spending on two approved RNG facilities and one Recycling growth project expected to be completed and begin contributing Operating EBITDA by 2028.
WM also reiterated capital return plans. Fish said the board approved a 14.5% increase in the planned quarterly dividend rate in 2026, representing the company’s 23rd consecutive year of dividend growth. WM authorized a new $3 billion share repurchase program and plans to return about $3.5 billion to shareholders in 2026 through dividends and repurchases, which management said represents more than 90% of expected free cash flow.
Macro and volume commentary: optimism, but weather and mix effects noted
Asked about industrial demand, management said industrial volumes had been down 3% to 4% for several quarters but had “bounced back to almost flat,” which executives called encouraging. Fish said the company is optimistic about the macro environment, pointing to strength in landfill and special waste and signs residential volumes are normalizing after deliberate shedding of low-margin business.
Management said weather impacted December volumes, particularly in MSW and the industrial line of business, though executives emphasized the company “made it up on the EBITDA line.” WM also said residential volume declines have been intentional and that residential volumes are expected to improve during 2026, with Morris describing a trajectory where residential volume headwinds moderate through the year.
About Waste Management (NYSE:WM)
Waste Management, Inc (NYSE: WM) is a leading provider of integrated waste management and environmental services in North America. The company offers end-to-end solutions that span collection, transfer, disposal and recycling, along with landfill operations and related infrastructure. Headquartered in Houston, Texas, Waste Management serves a broad customer base that includes residential, commercial, industrial and municipal clients.
Core services include curbside and commercial waste collection, roll-off and temporary container services, materials recovery and recycling, and engineered landfill disposal.
