tapebrief
WM · Q4 2025
Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

WM · Q1 2026 Earnings

Waste Management

Reported April 28, 2026

30-second summary

Revenue grew 3.5% YoY to $6.23B with adjusted operating EBITDA margin of 29.8% and FCF of $920M, and management reaffirmed every line of the FY2026 guide — FCF $3.75–3.85B, EBITDA $8.15–8.25B, revenue $26.43–26.63B. The bullish reads: core price 6.3% printed above the 5.4–5.8% FY range, C&D yield 3.9% cleared the 3.2–3.6% range, Renewable Energy revenue +74.7%, and FCF margin of 14.8% is consistent with the +29% FY trajectory. The asterisks: C&D volume came in at -1.5% against a +0.2–0.6% FY guide, and Healthcare Solutions revenue declined 0.8% YoY against an "around 3%" FY anchor — both reaffirmed without revision, which puts a real H2 catch-up burden on the algorithm.

Headline numbers

EPS

Q1 FY2026

$1.81

Revenue

Q1 FY2026

$6.23B

+3.5% YoY

Free cash flow

Q1 FY2026

$0.92B

Operating margin

Q1 FY2026

17.9%

Key financials

Q1 FY2026
MetricQ1 FY2026YoYQ4 FY2025QoQ
Revenue$6.23B+3.5%$6.31B-1.4%
EPS$1.81—$1.93-6.2%
Operating margin17.9%—18.3%-40bps
Free cash flow$0.92B—$0.82B+11.8%

Guidance

WM reaffirmed full-year FY2026 guidance across revenue, adjusted operating EBITDA, free cash flow, and operational metrics, with management expressing confidence in achieving the outlook despite volume headwinds in Q1.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ1 FY2026—$6.227 billionin-lineMet

Reaffirmed unchanged this quarter: Free Cash Flow ($3,750 - $3,850 million), Adjusted Operating EBITDA ($8,150 - $8,250 million), Adjusted Operating EBITDA Margin (30.8%-31.0%), Core Price Growth - Collection and Disposal (5.4% to 5.8%), Yield Growth - Collection and Disposal (3.2% to 3.6%), Volume Growth - Collection and Disposal (0.2% to 0.6%), Revenue ($26,425 - $26,625 million), Healthcare Solutions Revenue Growth (around 3%)

Segment KPIs

Q1 FY2026
SegmentQ1 FY2026YoY
Collection and Disposal$5.081B+3.2%
Recycling Processing and Sales$0.368B-4.2%
Renewable Energy$0.159B+74.7%
Healthcare Solutions$0.614B-0.8%
Collection and Disposal Adjusted Operating EBITDA Margin38.5%—

Other KPIs

Q1 FY2026
SegmentQ1 FY2026
Adjusted Operating EBITDA Margin29.8%
Operating EBITDA$1,853 million
Core Price Growth6.3%
Collection and Disposal Yield3.9%
Collection and Disposal Volume-1.5%
Free Cash Flow$920 million
Operating Cash Flow$1,501 million

Management tone

Narrative arc: Q2 "approaching historical best" → Q3 "harvest phase begins" → Q4 "harvest delivered, capital return resumes" → Q1 "execution validates the harvest, second-half inflection still the operative model."

Volume reframed from "structural challenge" to "weather-driven dip with inflection coming." Through 2025 management treated soft industrial volumes as a multi-quarter trend requiring fleet right-sizing; in Q3 the +1.2% industrial print was the first cyclical bull signal in eight quarters; in Q4 the +0.3% workday-adjusted C&D print was characterized as durable. This quarter, against a -1.5% headline volume number, the tone shift is explicit: Jim called out "MSW volume was over 4% positive for us... industrial volumes, which have finally shown a reversal of probably a six or seven quarter trend... we're fairly encouraged with volume numbers." That's a deliberate move from defense to "look past the print" — the bull case requires Q2 to validate the call.

Healthcare Solutions language moved from "cleanup" to "pricing-driven inflection." Q2 2025 framed Stericycle as "needle mover delivering"; Q3 as "measured pace"; Q4 as front-half headwind with back-half tailwind. This quarter is the cleanest forward articulation yet: "We expect an inflection in revenue growth in the second half of 2026 as the ERP is stabilized and the benefits of our integrated offering become more evident." The shift from reactive integration commentary to proactive "integrated offering benefits" positioning is the largest narrative move of the print — and now sits against a -0.8% Q1 revenue line that makes the H2 conviction the central test.

Sustainability capex shifted from "deployed over time" to "substantially complete in 2026." Jim's prepared remark — "In 2026, we're on track to substantially complete the sustainability capital expenditure program we laid out in 2023" — combined with the +74.7% Renewable Energy revenue print and Tara's note that "80% of our volume is locked in for the year. That's up from 60% when we announced guidance in January" — closes the loop on the harvest narrative that began in Q3. The capex tailwind that drives the +29% FCF guide is no longer a forecast; it's a current-period operating result.

Technology re-framed from cost play to multi-dimensional value driver including talent retention and autonomy. Q2 2025 framed routing/fleet tech as cost optimizer; Q3 added the harvest framing. This quarter the narrative widened materially — John noted "we're using different forms of technology and AI to process about 95% of those images without a human having to touch them" on recycling, and Jim added "we're in the early innings in terms of our ability to embed technology... to make these jobs more palatable... That's the best Q1 safety numbers we've posted." Reframing technology ROI from purely financial to human capital (retention, safety) and to autonomous-pathway optionality expands the moat narrative beyond margin.

Price-cost spread quietly revised upward. Through 2025 management positioned the spread as durable at historical levels (~150–200bps). In Q1, David put a sharper number on the page — "It's probably a little bit more than that, over 200 basis points now" — an explicit upward revision. Combined with the 6.3% core price print above the FY range, this is the quietest but cleanest signal that the EBITDA margin reaffirmation has upside optionality, not downside risk.

Recurring themes management leaned on this quarter:

Volume inflection narrative: weather-driven Q1 dip as setup for H2 recoveryHealthcare solutions front-half/back-half story now materializing as expectedSustainability capex harvest phase with RNG facilities and recycling automation delivering returnsTechnology and AI embedded across operations (smart truck, recycling automation, safety coaching, routing/logistics pilots)Price-cost spread expansion and margin resilience despite volume softnessFree cash flow conversion ramping with shareholder return acceleration

Risks management surfaced:

Volume headwinds from winter weather and absence of prior-year wildfire volumesQ2 margin comparison difficult due to $85M+ wildfire-related revenue in prior yearHealthcare solutions customer credit memo tail risk (though noted as peaked in Q4)Interconnect delays with utilities affecting renewable energy plant commissioning timingFreight cost volatility from Middle East disruptions impacting recycling commodity transport

Answers to last quarter's watch list

Q1 buyback execution vs. the $2B FY commitment. The press release doesn't break out Q1 buyback deployment dollars in the figures provided; operating cash flow of $1.501B and FCF of $920M are on the page, but specific share repurchase dollars weren't itemized. The FY $2B commitment was not revised, and the reaffirmed FCF guide signals confidence in the underlying capital-return math. Status: Continue monitoring.
Healthcare Solutions Q1 revenue growth vs. the FY "around 3%" anchor. Q1 printed -0.8% YoY — well below the FY anchor and confirming the front-half-trough framing. The "around 3%" FY guide was reaffirmed, which means H2 acceleration needs to clear ~6% to land mid-range. Management's qualitative commitment to a back-half inflection is firmer than ever, but Q1 increased the back-half catch-up burden materially. Status: Resolved negatively for Q1 print; reaffirmation makes Q2 the next decision point.
C&D core price holding above 5.4% floor. Core price printed 6.3%, comfortably above the FY 5.4–5.8% range floor — and yield at 3.9% also cleared the 3.2–3.6% range. Pricing power is running ahead of plan, which gives the EBITDA reaffirmation a margin of safety even with volume undershooting. Status: Resolved positively.
Consolidated EBITDA margin trajectory toward the 30.8–31.0% guide. Q1 printed 29.8%, ~100bps below the FY range. Management explicitly framed this as H1-weighted: "we expect EBITDA margin to lift nicely from there in the second half and follow a pattern similar to what we saw in 2025." In 2025, Q1 margin ran ~150bps below the FY ceiling and the year landed at 30.1% (within range). The Q1 print is consistent with the H2 ramp pattern, but not yet validating. Status: Continue monitoring.
Sustainability EBITDA progress with $70/ton commodity assumption. Renewable Energy revenue +74.7% YoY in Q1, and per Jim, segment operating EBITDA "more than doubled in the quarter." Recycling revenue decline narrowed to -4.2% from Q4's -10.8%. The decoupling thesis and the 2026 sustainability harvest are both tracking ahead of the bar set last quarter. Status: Resolved positively.

What to watch into next quarter

C&D volume trajectory vs. the FY +0.2% to +0.6% guide. Q1 ran -1.5%. Q2 needs to print at or above +1% for the FY guide to look credible by mid-year — anything still negative in Q2 forces a guide revision or a tone reset. Management's "weather-driven dip, inflection coming" framing is now the single largest test on the print.

Q2 comp pressure from the prior-year $85M+ wildfire revenue. Per the qualitative tone commentary, Q2 2025 included material wildfire-related revenue and roughly 45%+ flow-through margins on landfill/special-event volumes. Watch how the release frames YoY revenue and EBITDA dollars in Q2 — if management leans on "ex-wildfire compare" framing, treat it as confirmation the underlying volume call hasn't yet inflected.

Healthcare Solutions Q2 revenue growth. Q1 printed -0.8%; FY guide is "around 3%"; ERP stabilization and lost-account anniversary both back-half-weighted. A Q2 print still negative or near zero says the H2 acceleration needs to be steeper than +6% to clear the FY anchor — and at that point reaffirmation becomes harder to defend.

Consolidated EBITDA margin progression toward the 30.8–31.0% floor. Q1 at 29.8% is consistent with H2-weighted ramp pattern but provides little margin of safety. A Q2 print at 30.5%+ keeps the guide on track; sub-30% would flag the H2 ramp as needing more than 2025's pattern.

Price-cost spread holding above "over 200bps." David revised the realized spread upward in the call. Watch whether Q2 commentary holds the >200bps line or moderates back to the historical 150–200bps frame — sustained 200bps+ spread is what funds the margin guide reaffirmation against the volume drag.

Sources

  1. WM Q1 FY2026 Press Release (Form 8-K Exhibit 99.1), SEC filing dated April 28, 2026 — https://www.sec.gov/Archives/edgar/data/823768/000110465926050425/tm2612889d1_ex99-1.htm
  2. WM Q4 FY2025 Tapebrief (prior-quarter context, internal).
  3. WM Q3 FY2025 Tapebrief (prior-quarter context, internal).
  4. WM Q2 FY2025 Tapebrief (prior-quarter context, internal).

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