Waste Management Q2 Earnings Call Highlights

Q2 profitability and cash flow improved: Operating EBITDA rose 5.5% year over year, or 9.1% excluding prior-year wildfire activity, while free cash flow increased 35%. Margin expansion was driven by pricing, cost controls, productivity initiatives and technology investments. Revenue outlook was trimmed, but earnings guidance strengthened: WM narrowed its full-year revenue forecast to $26.275 billion–$26.475 billion due to softer collection volumes, lower recycling activity and delayed renewable natural gas connections. It maintained operating EBITDA and free-cash-flow guidance while raising its margin outlook to 31%–31.2%. Volumes remain soft, with growth in select businesses: Collection and Disposal volumes declined 0.4% excluding wildfire effects, though special waste, industrial services, recycling and Healthcare Solutions delivered gains. The company also reported strong cash generation, returned $1 billion through share repurchases and $764 million in dividends, and expects leverage to decline in the second half.

Waste Management NYSE: WM reported second-quarter operating EBITDA growth of 5.5%, or 9.1% excluding contributions from wildfire cleanup activity in the prior-year period, as pricing discipline, cost controls and technology investments supported profitability despite softer volume trends. Chief Executive Officer Jim Fish said operating EBITDA margin expanded 40 basis points during the quarter, overcoming a 60-basis-point headwind from prior-year wildfire volumes and a 40-basis-point headwind tied to higher energy surcharges. Free cash flow increased 35% in the quarter, supported by earnings growth, lower capital expenditures and working-capital benefits.

The company narrowed its full-year revenue outlook to between $26.275 billion and $26.475 billion, a reduction of about 1.5%, reflecting softer-than-expected Collection and Disposal volumes, lower recycling brokerage activity and delays connecting certain renewable natural gas plants to pipelines. Management maintained its full-year operating EBITDA and free-cash-flow guidance and raised its margin outlook by 20 basis points.

President John Morris said operating expenses remained below 60% of revenue for the sixth consecutive quarter, despite the combined effects of prior-year wildfires and increased fuel prices. Labor costs rose approximately 4%, but collection operating costs increased less than 1.7% from the second quarter of 2025, according to Morris. Management attributed the cost performance to productivity initiatives, pricing actions, automation, process discipline and technology investments. Fish said WM’s Smart Truck platform, which uses technology including artificial intelligence, is generating more than $300 million in annual run-rate operating EBITDA through service upgrades, route optimization and lower operating costs. Chief Financial Officer David Reed said Collection and Disposal improvements contributed 140 basis points of margin growth, while recycling, renewable energy and Healthcare Solutions together added 40 basis points. Those gains were partly offset by roughly 40 basis points from higher technology investments and the timing of risk-management costs in the company’s corporate and other segment. SG&A expense improved by 60 basis points to 9.9% of revenue, returning below 10% for the first time since the company acquired its Healthcare Solutions business in 2024. Reed said WM expects full-year SG&A to be around 10% of revenue.