tapebrief
WM · Q3 2025

WM · Q4 2025 Earnings

Bullish

Waste Management

Reported January 28, 2026

30-second summary

Q4 revenue grew 7.1% YoY to $6.31B and FY FCF closed at $2.937B, ~$37M above the prior guide ceiling. The 2026 guide is the print: FCF $3.75–3.85B (+29.4% YoY at midpoint), EBITDA $8.15–8.25B (+6.2%), and management put a hard number on capital return — ~$3.5B total in 2026, comprising ~$1.5B in dividends (the board indicated intent to raise the annual dividend $0.48 to $3.78/share, +14.5%) and ~$2B in share repurchases resuming in Q1 under a newly authorized $3B program. That converts last quarter's "approaching $3.8B" tease into a hard midpoint and puts capital return on the page. The softer notes: Q4 core price decelerated to 6.2% (FY2025 came in at 6.3%) trending toward a 5.4–5.8% 2026 guide, Healthcare Solutions 2026 revenue growth guided to "around 3%" as lost-account anniversaries pressure the front half, and FY revenue of $25.204B landed marginally below the $25.275B point named last quarter.

Headline numbers

EPS

Q4 FY2025

$1.93

Revenue

Q4 FY2025

$6.31B

+7.1% YoY

Free cash flow

Q4 FY2025

$0.82B

Operating margin

Q4 FY2025

18.3%

Key financials

Q4 FY2025
MetricQ4 FY2025YoYQ3 FY2025QoQ
Revenue$6.31B+7.1%$6.44B-2.0%
EPS$1.93—$1.98-2.5%
Operating margin18.3%—15.3%+300bps
Free cash flow$0.82B—$0.82B+0.2%

Guidance

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
RevenueFY2025$25.275 billion (at low end of prior range)$25.204 billionin-line with low-end guidanceBeat
Adjusted Operating EBITDAFY2025$7.475 - $7.625 billionNot disclosed in actuals—Beat
Adjusted Operating EBITDA MarginFY202529.6% to 30.2%~30.0%at midpoint of guidanceBeat
Free Cash FlowFY2025$2.8 - $2.9 billion$2.937 billion+$37-137M above guidance high endBeat

New guidance

MetricPeriodGuideYoY
RevenueFY2026$26.425 - $26.625 billion+4.8% to +5.6% YoY
Adjusted Operating EBITDAFY2026$8.150 - $8.250 million+6.2% YoY
Adjusted Operating EBITDA MarginFY202630.8% - 31.0%—
Free Cash FlowFY2026$3.750 - $3.850 million+29.4% YoY
Core Price Growth - Collection and DisposalFY20265.4% to 5.8%—
Yield Growth - Collection and DisposalFY20263.2% to 3.6%—
Volume Growth - Collection and DisposalFY20260.2% to 0.6%—
Healthcare Solutions Revenue GrowthFY2026around 3%—

Segment KPIs

Q4 FY2025
SegmentQ4 FY2025YoY
Collection and Disposal$5.18B+3.5%
Recycling Processing and Sales$0.355B-10.8%
Renewable Energy$0.157B+68.8%
Healthcare Solutions$0.615B+52.6%

Other KPIs

Q4 FY2025
SegmentQ4 FY2025
Operating EBITDA Margin (Adjusted)31.3%
Legacy Business Operating EBITDA Margin (Adjusted)32.8%
Collection and Disposal Core Price6.3%
Collection and Disposal Volume Growth (Workday Adjusted)0.3%
Healthcare Solutions Operating EBITDA Margin (Adjusted)16.9%
Free Cash Flow$823 million
Operating Cash Flow$1,698 million
Internalization of Waste72.3%

Management tone

Narrative arc: Q2 "approaching historical best" → Q3 "harvest phase begins" → Q4 "harvest delivered, capital return resumes."

The "approaching $3.8B" FCF tease became a hard midpoint. Last quarter management volunteered a forward-looking FCF figure that read as aspirational; this quarter that figure is the guidance midpoint with a +29.4% growth label attached. The credibility transfer matters because it validates the capex-normalization story: the 2025 FCF beat ($2.937B vs. $2.8–2.9B guide) shows the harvest started in 2025, and the 2026 guide says it continues. Per prepared remarks: "We expect to grow free cash flow by nearly 30% at the midpoint of our guidance."

Capital return moved from qualitative to quantified. Q3 mentioned "substantial share repurchases" off the 2026 FCF base; Q4 puts the full number on the page — ~$3.5B in total return, comprising ~$1.5B in dividends (a 14.5% planned hike to $3.78/share, the 23rd consecutive year of dividend growth) and ~$2B in buybacks resuming Q1 under a new $3B authorization. Per Jim Fish: "We plan to return about $3.5 billion to shareholders through dividends and share purchases in 2026, representing more than 90% of free cash flow we expect to generate." This is the cleanest commitment to capital return WM has made in the cycle.

Pricing tone moderated for the first time in this cycle. Through Q2 and Q3 management was selling 6%+ core price as the durable algorithm. The 2026 guide of 5.4–5.8% core price is a step down from the 6.2% Q4 print (6.3% FY) — not dramatic, but the first time in this guidance cycle that pricing is being framed as decelerating. The offset is margin expansion (30.8–31.0% vs. 30.1% in 2025), which means the algorithm is shifting from "price ahead of cost" to "operating leverage on flatter volume."

Healthcare Solutions language shifted from "needle mover delivering" to "front-half headwind, back-half tailwind." Q2 was momentum; Q3 was "measured pace"; Q4 is explicit on timing — per Q&A, lost accounts will largely anniversary in the back half of 2026, with credit memos peaking in Q4 2025 and trending down. The 3% 2026 revenue guide reflects this trough; management is now setting up 2027 as the year the 5–6% long-term algorithm becomes visible.

2027 detailed guidance explicitly withheld. Per Q&A with Citi: detailed 2027 targets from Investor Day are now framed as "estimates, not detailed guidance," with management citing 12-month business visibility and unreliable 18–24-month commodity forecasts. This is a small but real walking-back of forward visibility, partially explained by the commodity hit ($125/ton → $70/ton, ~$55M EBITDA impact per Q&A with Raymond James).

Q&A highlights

Sabahat Khan · RBC Capital Markets

What is embedded in top-line guidance regarding macro backdrop, industrial activity, and C&D market recovery?

Management indicated cautious-to-optimistic macro outlook. Industrial volumes, which had been down 3-4% for 7-8 quarters, have bounced back to nearly flat. Landfill, special waste, and residential shedding all supporting growth. Management believes economy is on firm footing.

Industrial volumes rebounded to ~flat after 3-4% declines for 7-8 quartersLandfill volumes remain a source of strengthSpecial waste volumes growingResidential volume decline moderating

Brian Berthier · Citi

Why were 2027 financial targets put on hold, and what warrants discretion on providing detailed 2027 guidance?

Management clarified that 2027 figures provided at Investor Day were high-level estimates, not detailed guidance. Business visibility typically extends ~12 months; commodity price forecasting 18-24 months out is unreliable. No concerning issues identified for 2027; consistency in historical performance expected to continue.

2027 targets are estimates, not detailed guidanceBusiness visibility ~12 months typicalCommodity price forecasting 18-24 months unreliableDetailed 2027 guidance to be provided one year from now

Tony Kaplan · Markel Stanley

Will healthcare customer issues (Star Cycle accounts, credit memos) be resolved in 2026, and what is the outlook for healthcare market growth?

Management indicated lost accounts will largely anniversary by back half 2026, turning into a tailwind. Credit memos peaked in Q4 and trending downward. Customer service metrics now exceed legacy business levels. Infrastructure 'wall' built between back-office issues and customer-facing service. Long-term 5-6% growth trajectory intact; healthcare demographic tailwind remains. Management confident in strategic case despite past skepticism.

Lost accounts anniversary mostly in back half 2026 (volume headwind front half)Credit memos peaked in Q4, trending downwardCustomer service metrics above legacy business levelsLong-term healthcare growth outlook: 5-6%

Tyler Brown · Raymond James

Can you reconcile the ~$700M incremental sustainability EBITDA targeted for 2027 against the $760-800M disclosed at Investor Day?

Bridge: $125/ton commodity assumption at Investor Day vs. $70/ton now ($55M impact); electricity cost headwinds from learned operations experience. Recycling and RNG investments performing well operationally, but commodity price assumptions revised lower. Long-term paybacks on RNG: 3-4 years (vs. prior 2.5-3 years), still attractive.

Commodity price headwind: $125/ton → $70/ton (~$55M EBITDA impact)Electricity cost headwinds (offset by potential long-term LFG-to-electricity upside)RNG payback period: ~3-4 years (vs. 2.5-3 years prior)Recycling EBITDA growth: 22% despite 18% lower commodity prices (2025)

Answers to last quarter's watch list

Q4 print vs. the FY revenue point of $25.275B. FY revenue closed at $25.204B — $71M below the point management explicitly named in Q3. No pre-announcement was issued. The miss is small in percentage terms (~0.3%) but it broke the cycle of meeting quantified guides, and it's notable that the release frames revenue around growth percentages rather than the prior point. Status: Resolved negatively (small but real).
2026 FCF guide: midpoint or ceiling? The "approaching $3.8B" tease anchored as the midpoint with a $3.75–3.85B range (+29.4% YoY). The harvest narrative is validated; this is the cleanest positive resolution on the print. Status: Resolved positively.
Healthcare Solutions revenue trajectory post-ERP stabilization. 2026 revenue growth guided "around 3%" — well below the 5–6% long-term aspiration — with management explicitly attributing the gap to lost-account anniversaries that don't lap until back-half 2026. The timing tail extended further. Q4 adjusted segment margin (17.1%) held above the Q3 print, though SG&A continued to improve to 20.8%. The structural thesis is intact, but the curve flattened. Status: Resolved negatively for 2026; thesis intact for 2027+.
Quantified Stericycle synergy exit-rate. Per Q&A, 2025 SG&A synergies exceeded the $80–100M target and the original $300M cumulative synergy goal remains on track. Healthcare SG&A intensity dropped 420bps in-year (25% → 20.8%). Management did not put a new dollar exit-rate number on the page comparable to the ~$150M Q2 figure, but the trajectory disclosure was more substantive than Q3's qualitative answer. Status: Continue monitoring (better than Q3, not as clean as Q2).
Industrial volume durability. Per Q&A, industrial volumes (down 3–4% for 7–8 quarters) rebounded to ~flat. Workday-adjusted C&D volume was +0.3% in Q4. Management characterized the macro as improving and embedded 0.2–0.6% volume in 2026 guide. The +1.2% Q3 print is not flagged as a mix artifact; trajectory is being maintained, not accelerated. Status: Resolved positively (durability confirmed, magnitude flat).

What to watch into next quarter

Q1 2026 buyback execution vs. the $2B FY commitment. Management said buybacks resume in Q1. A Q1 print showing $400–500M+ deployed would be on pace; materially less would suggest the FCF inflection isn't tracking and the $2B is back-end loaded. This is the cleanest test of management's confidence in the $3.80B FCF midpoint.

Healthcare Solutions Q1 revenue growth vs. the FY "around 3%" anchor. Front half is guided as the trough — credit memos taper, lost accounts haven't lapped. If Q1 prints sub-3% YoY revenue growth, the back-half acceleration story has to do more work. If Q1 surprises higher, the 3% FY guide is conservative and 2027 5–6% gets pulled forward.

C&D core price holding above 5.4% floor. The 2026 guide implies deceleration from Q4 2025's 6.2%. Watch whether Q1 core price prints at the 5.4–5.8% range floor or above — sustained pricing power above the range would suggest the 2026 EBITDA guide is conservative.

Consolidated EBITDA margin trajectory toward the 30.8–31.0% guide. Q4 2025 already printed 31.3%. If Q1 holds above 30.8%, the FY ceiling becomes the realistic outcome and the margin guide is conservative. A Q1 sub-30% print would suggest the Q4 number had one-time tailwinds.

Sustainability EBITDA progress with $70/ton commodity assumption. Per Q&A, the $55M EBITDA commodity headwind is now baked in. Watch whether recycling segment EBITDA can sustain double-digit growth at $70/ton — the 2025 print of +22% EBITDA against ~20% lower commodity prices is the bar.

Sources

  1. WM Q4 FY2025 Press Release (Form 8-K Exhibit 99.1), SEC filing dated January 28, 2026 — https://www.sec.gov/Archives/edgar/data/823768/000110465926007476/tm264211d1_ex99-1.htm
  2. WM Q4 FY2025 Earnings Conference Call Transcript, January 29, 2026.
  3. WM Q3 FY2025 Tapebrief (prior-quarter context, internal).
  4. WM Q2 FY2025 Tapebrief (prior-quarter context, internal).

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