Waste Management Reports 19% Q2 Growth
Key Points
- Waste Management (NYSE:WM) exceeded expectations with non-GAAP EPS of $1.92 and revenue of $6.43 billion in Q2 2025.
- Renewable energy and healthcare segments drove a 19.0% year-over-year GAAP revenue increase in Q2 2025.
- Free cash flow (non-GAAP) and dividend growth remain robust, and management has raised annual free cash flow guidance for fiscal 2025.
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Waste Management (NYSE:WM), the leading North American waste, recycling, and sustainability firm, posted better-than-expected results, released on July 28, 2025. The company reported adjusted EPS (non-GAAP) of $1.92 (versus a $1.89 estimate) and GAAP revenue of $6.43 billion (surpassing the $6.36 billion consensus). These results reflect robust operational gains, strong segment performances, and ongoing integration of acquired businesses. Overall, the quarter marks notable progress in both cash flow and profitability, although soft recycling prices and integration costs remain areas of attention.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.92 | $1.89 | $1.82 | 5.5 % |
| Revenue (GAAP) | $6.43 billion | $6.36 billion | $5.40 billion | 19.0 % |
| Adjusted Operating EBITDA | $1.92 billion | $1.62 billion | 18.8 % | |
| Adjusted Operating EBITDA Margin | 29.9 % | 30.0 % | (0.1 pp) | |
| Free Cash Flow (Non-GAAP) | $818 million | $530 million | 54.3 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Waste Management collects, processes, recycles, and disposes of commercial, industrial, and residential waste throughout North America. It operates landfills, recycling plants, and renewable energy projects, handling both everyday trash and specialized materials like medical waste. The company serves municipalities, businesses, hospitals, and government agencies.
In recent years, Waste Management has focused on expanding sustainability projects, such as landfill-gas-to-energy facilities and next-generation recycling automation. Mergers and acquisitions, most notably the addition of its Healthcare Solutions unit, have expanded its footprint into regulated medical waste and secure information destruction. Key success factors include optimizing costs, deploying automation, responding to regulatory changes, and providing differentiated environmental services to its customers.
Quarter Highlights: Operational and Financial Drivers
The company’s core collection and disposal business, which includes picking up and processing commercial, industrial, and residential waste, remained the largest revenue contributor. Revenue in this segment reached $5.78 billion, up 7.1%. Its adjusted EBITDA margin expanded to 31.3%, rising 1.3 percentage points over last year. Notably, Waste Management improved its operating expense margin to a record low of 59.4% of revenue, indicating greater efficiency in running its core operations.
Renewable energy activities, including landfill-gas-to-energy and renewable natural gas (RNG) projects, delivered double-digit operating EBITDA gains (non-GAAP) even as the average price for renewable credits and recycled commodities dipped. Waste Management opened three new growth projects: a new RNG facility in Illinois, an automated recycling center in Pennsylvania, and a new recycling plant in Oregon. These projects support its target for a total of 20 new RNG and 39 automated recycling projects. Recycling operations saw average commodity prices fall to $82 per ton from $96 per ton year over year, leading to a decline in recycling revenue.
Healthcare Solutions, which covers regulated medical waste and secure document destruction services, generated $646 million in revenue and $110 million in adjusted EBITDA, as Waste Management advanced its integration of the Stericycle business. Margins in this segment are improving but remain below the legacy operation. Cost efficiency efforts, such as reducing selling, general, and administrative (SG&A) expenses, dropped the segment’s adjusted SG&A ratio by 2.7 points from the previous quarter (non-GAAP). Revenue was impacted by the company’s exit from its Spain and Portugal businesses. Management indicated it is on track to achieve the upper end of its targeted synergies of $80 to $100 million for fiscal 2025, with a longer-term goal of $300 million in run-rate EBITDA synergies by 2027.
Sustained cost discipline extended to company-wide adjusted SG&A, which stood at 10.5% of revenue (up from 9.1% in Q2 2024, due to strategic investments in technology and optimization). Free cash flow (non-GAAP) increased significantly compared to the prior year period. Operating cash flow for the first half of 2025 rose 9.2% compared to the first half of 2024. Waste Management also invested $365 million in acquisitions, adding $131 million in annualized revenue through deal activity.
The company declared a 10% dividend increase for 2025, marking its 22nd consecutive annual raise. Share buybacks are paused as Waste Management works to restore leverage following the Stericycle acquisition.
Weather-related impacts, which reduced waste volumes in the winter, normalized through the spring. The company continued its strategic exit from unprofitable residential contracts, prioritizing higher-margin business even if it means forgoing some revenue in the short term.
On the workforce front, automation and technology enabled Waste Management to eliminate around 2,600 roles through attrition over previous periods, with plans to reduce another 940 positions in 2025. These efficiency gains are part of a long-term plan to improve safety and support retention while reducing labor costs.
Outlook and Investor Considerations
Management reaffirmed its full-year targets on most operating metrics. The adjusted operating EBITDA (non-GAAP) guidance midpoint remains at $7.55 billion for 2025, with the annual adjusted operating EBITDA margin now expected to range between 29.6% and 29.9%. Free cash flow guidance (non-GAAP) was raised to $2.8–2.9 billion for fiscal 2025, reflecting recent tax policy changes restoring full bonus depreciation. The annual revenue outlook for 2025 was trimmed to a range of $25.28–$25.48 billion, primarily due to reduced recycling commodity prices and a slow winter season.
For the remainder of the year, investors should watch how Waste Management develops its healthcare segment, captures planned synergies, and further scales automation in recycling and fleet management. Commodity prices for recycled materials and renewable credits remain a potential source of earnings volatility, but the company’s expansion in RNG and automation projects, along with ongoing capital investments, aim to mitigate some of this risk.
The quarterly dividend was raised 10%. Management indicated that share repurchases will resume once financial leverage targets are met.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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