WM · Q2 2025 Earnings
BullishWaste Management
Reported July 28, 2025
30-second summary
Revenue grew 19% YoY to $6.43B with adjusted operating EBITDA margin of 29.9%, "quickly approaching historical best levels" even while absorbing the dilutive Stericycle (WM Healthcare Solutions) acquisition. Management raised the FY EBITDA margin floor by 40bps, lifted FCF guidance by $125M, and is now tracking the upper end of the $80-100M synergy target — language shifted markedly toward "forever stock" and structural rather than cyclical margin gains. The only meaningful soft spots are recycled commodity prices (-15% YoY, but segment EBITDA still +17%) and a strategic Florida residential franchise exit (~185bps residential volume drag).
Headline numbers
EPS
Q2 FY2025
$1.92
Revenue
Q2 FY2025
$6.43B
+19.0% YoY
Free cash flow
Q2 FY2025
$0.82B
Operating margin
Q2 FY2025
17.9%
Key financials
Q2 FY2025| Metric | Q2 FY2025 | YoY |
|---|---|---|
| Revenue | $6.43B | +19.0% |
| EPS | $1.92 | — |
| Operating margin | 17.9% | — |
| Free cash flow | $0.82B | — |
Guidance
Prior quarter data unavailable — comparison not possible.
Segment KPIs
Q2 FY2025| Segment | Q2 FY2025 | YoY |
|---|---|---|
| Collection and Disposal | $5.281B | +7.3% |
| Recycling Processing and Sales | $0.381B | -5.9% |
| WM Renewable Energy | $0.115B | +66.7% |
Other KPIs
Q2 FY2025| Segment | Q2 FY2025 |
|---|---|
| Adjusted Operating EBITDA | $1,923 million |
| Adjusted Operating EBITDA Margin | 29.9% |
| WM Legacy Business Adjusted Operating EBITDA Growth | 12.1% |
| Collection and Disposal Adjusted Operating EBITDA Margin | 37.9% |
| Core Price Growth (Collection and Disposal) | 6.4% |
| Collection and Disposal Volume Growth | 1.6% |
| Landfill Volumes Growth | 4.5% |
| Free Cash Flow (H1 2025) | $1,293 million |
Management tone
The Q2 release and call read notably more forward-leaning than typical WM communications. Four shifts stand out.
Technology re-framed from cost optimizer to structural value-chain integration. Prior WM commentary positioned routing/fleet tech as ongoing operational efficiency. This quarter management explicitly described it as connecting "the full value chain of WM, from routing and fleet management to customer communication and maintenance," adding that "structurally lowering our cost base isn't about temporary cuts." The shift signals management views recent margin gains as persistent, not cyclical — a critical anchor for the FY margin raise.
Healthcare Solutions transitioned from "rationale to prove" to "needle mover delivering." Management language is more definitive: "we've known this is going to be a needle mover for us and you're starting to see it in our results." With 190bps of post-close margin improvement and synergies pacing to the upper end of the target, the de-risking of the Stericycle thesis is the single largest narrative shift in this print.
Margin expansion framed as approaching historical peak, not incremental. "Delivered total company operating EBITDA margin of almost 30%, quickly approaching historical best levels despite the known headwind from the acquisition of the healthcare solutions business." The qualifier matters — management is telegraphing that ex-Stericycle dilution, the underlying business is already at peak, and the consolidated number has room to follow as synergies compound.
"Forever stock" framing. Management said directly: "WM is a forever stock, the type of stock you buy and hold indefinitely." This is uncharacteristically promotional language for WM and reflects confidence that the combination of unreplicable landfill network, sustainability platforms (RNG, recycling automation), and Stericycle cross-sell creates a multi-decade compounding setup.
Recurring themes management leaned on this quarter:
Risks management surfaced:
Q&A highlights
Brian Bergmeyer · Citi
Asked about margin cadence in H2 2025, specifically whether WM could achieve 31% peak margin in Q3 like last year, or if margins would be flattish year-over-year similar to Q2. Also inquired about volume growth expectations for the year.
Management indicated normalized margin expansion (excluding alt fuel tax credit) was 120 bps in H1, exceeding 50-100 bps target. Projected 110 bps full-year C&D margin improvement. WM Healthcare Solutions headwind of 140 bps in Q2 expected to normalize in H2 by 10-20 bps. Volume guidance reiterated at 0.25-0.75% growth, with 0.5% midpoint.
Tony Kaplan · Markel and Stanley
Asked about volume strength drivers beyond wildfires, particularly in MSW and C&D. Also requested color on the large residential contract loss and core price vs. yield dynamics.
June was strongest volume month; MSW up 4.5%, C&D up 9.4%, both excluding fire volume. Roll-off industrial improved significantly. Large Florida residential franchise loss (~185 bps of residential volume loss) was strategic exit due to unacceptable performance/margins. Core price on track; yield slightly below midpoint of 4-4.2% guidance (expected ~4%).
Sabahat Khan · RBC Capital Markets
Asked for update on residential business optimization journey and progress to date. Also requested puts and takes on EBITDA margin given revenue guide reduction but maintained margin guidance.
Approximately 70% of residential business now at acceptable EBITDA margin levels. Residential volume losses expected to moderate from 3.7% in Q2 to ~2.7% by end of 2025. EBITDA margin improved 40 bps at midpoint (30 bps from C&D, 10 bps from recycling commodity benefit). Mix and landfill volume were key C&D contributors; price-cost spread added ~25 bps.
Noah Kay · Oppenheimer
Asked about confidence in upper end of $80-100M synergy capture range for 2025, exit rates for Q4, and reconciliation with $250M three-year target and implied $300M total including cross-sell opportunities.
Still targeting upper range of $100M synergies for 2025, coming in pro rata with SG&A weighted to H1. Internalization benefits ramping in H2 2025. Exit rate entering 2026 will be approximately 50% higher than $100M run rate. Cross-sell component ($50M) separate from $250M cost synergies. Also discussed RNG contracting (90% locked for 2025 at ~255 RIN price vs. market) and automation driving recycling growth.
Jim Shum · TD Cowen
Requested revenue split between medical waste and secure information destruction within WM Healthcare Solutions. Inquired about long-term EBITDA growth expectations for the business.
Revenue split approximately two-thirds medical waste / one-third information destruction. Long-term top-line aspiration 5-6% growth for both businesses combined. Currently prioritizing customer relationships and revenue quality over growth, implementing more rigorous pricing cadence. ERP systems integration issues being addressed with right resources; specific long-term EBITDA growth rates deferred until post-ERP stabilization (beyond 2027). 2025-27 guidance provided at Investor Day remains benchmark.
What to watch into next quarter
Q3 FY2025 consolidated EBITDA margin vs. the 31% Q3 FY2024 prior peak — if WM clears it despite the Healthcare drag still being ~120bps, the structural-margin narrative is validated; if it stalls flat YoY, expect debate over how much of H1 was alt-fuel-credit timing.
Stericycle synergy exit-rate disclosure — management guided to a ~$150M run-rate exiting 2025. A Q3 quantified update toward or above that benchmark de-risks 2026 EBITDA build; a hedge would be a meaningful warning sign.
Residential volume loss moderation toward -2.7% — Q2 ran -3.7%; the back-half trajectory is the test of whether the Florida franchise exit was the bulk of the residential book-cleaning or whether more attrition is coming.
Recycled commodity prices and recycling EBITDA decoupling — recycling EBITDA grew 17% with commodities -15% YoY. Watch whether segment EBITDA growth can sustain double-digits if commodities stay weak — the bull case requires this segment to behave like a processing-fee business, not a commodity business.
FY FCF print relative to the new $2.8–2.9B range — H1 delivered $1.293B; back-half needs ~$1.5–1.6B. Sustainability capex and Stericycle integration cash costs are the swing factors. RNG pricing — with 2026 already 30% contracted at ~$2.60/RIN vs. Q2 spot of $2.53 — is a secondary lever worth tracking.
Sources
- WM Q2 FY2025 Press Release (Form 8-K Exhibit 99.1), SEC filing dated July 28, 2025 — https://www.sec.gov/Archives/edgar/data/823768/000110465925071187/tm2521801d1_ex99-1.htm
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