WM's Revenue Soars 16.8% Amidst Rising Costs, Net Income Dip

TL;DR

**WM's top-line growth is strong, but rising costs and interest expense are eating into the bottom line, making it a cautious hold.**

AI Summary

Waste Management, Inc. (WM) reported a significant increase in operating revenues for the nine months ended September 30, 2025, reaching $18,891 million, up from $16,170 million in the prior year, a 16.8% increase. However, consolidated net income attributable to Waste Management, Inc. decreased to $1,966 million for the nine-month period, down from $2,148 million in 2024, representing an 8.4% decline. This reduction in net income was primarily driven by a substantial increase in interest expense, net, which rose to $689 million from $397 million, and a significant 'gain (loss) from divestitures, asset impairments and unusual items, net' of $239 million compared to $62 million in the prior year. The company also saw increased operating costs, selling, general and administrative expenses, and depreciation, depletion, and amortization. Total assets grew to $45,608 million from $44,567 million at December 31, 2024, largely due to an increase in property and equipment, net, and goodwill. Cash and cash equivalents decreased from $414 million to $175 million, while net cash provided by operating activities increased to $4,345 million from $3,879 million.

Why It Matters

This filing reveals a mixed financial picture for Waste Management, Inc., with robust revenue growth indicating strong demand for its environmental services, but a notable decline in net income due to increased operational costs and interest expenses. For investors, the 8.4% drop in net income and the significant increase in interest expense to $689 million could signal margin pressures and higher borrowing costs impacting profitability. Employees might see continued investment in operations given the increase in property and equipment, net, to $20,069 million. Customers are likely experiencing stable service as the company expands its offerings, particularly with the Stericycle acquisition. In the broader market, WM's performance reflects the ongoing challenges of managing inflation and interest rates within essential services, potentially impacting competitors like Republic Services, Inc. (RSG) and Clean Harbors, Inc. (CLH) who face similar economic headwinds.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant increase in interest expense, net, to $689 million for the nine months ended September 30, 2025, up from $397 million in the prior year, indicating higher borrowing costs. Additionally, the 'gain (loss) from divestitures, asset impairments and unusual items, net' surged to $239 million from $62 million, suggesting potential volatility from non-core activities or asset revaluations.

Analyst Insight

Investors should closely monitor WM's future earnings calls for management's strategy on mitigating rising interest expenses and controlling operational costs. While revenue growth is positive, the decline in net income warrants a cautious approach; consider holding existing positions but deferring new investments until profitability trends stabilize.

Financial Highlights

debt To Equity

3.79

revenue

$18,891M

operating Margin

16.7%

total Assets

$45,608M

total Debt

$23,362M

net Income

$1,966M

eps

$1.49

gross Margin

43.5%

cash Position

$175M

revenue Growth

+16.8%

Key Numbers

• $18,891M — Operating revenues (Increased from $16,170M in 2024 for the nine months ended Sept 30, 2025)
• $1,966M — Net income attributable to Waste Management, Inc. (Decreased from $2,148M in 2024 for the nine months ended Sept 30, 2025)
• $689M — Interest expense, net (Increased from $397M in 2024 for the nine months ended Sept 30, 2025)
• $239M — Gain (loss) from divestitures, asset impairments and unusual items, net (Increased from $62M in 2024 for the nine months ended Sept 30, 2025)
• $4,345M — Net cash provided by operating activities (Increased from $3,879M in 2024 for the nine months ended Sept 30, 2025)
• $175M — Cash and cash equivalents (Decreased from $414M at December 31, 2024)
• $20,069M — Property and equipment, net (Increased from $19,340M at December 31, 2024)
• $1.49 — Diluted earnings per common share (Decreased from $1.88 for the three months ended Sept 30, 2024)

Key Players & Entities

• Waste Management, Inc. (company) — Registrant and parent holding company
• Stericycle, Inc. (company) — Acquired company, forming WM Healthcare Solutions segment
• New York Stock Exchange (regulator) — Exchange where WM Common Stock is registered
• Delaware (regulator) — State of incorporation for Waste Management, Inc.
• Bloomberg (company) — Financial news and data provider
• Republic Services, Inc. (company) — Competitor in the environmental services industry
• Clean Harbors, Inc. (company) — Competitor in the environmental services industry
• SEC (regulator) — Securities and Exchange Commission

FAQ

Risk Factors

• Increased Operating Costs [medium — operational]: Operating costs increased by $1,489 million (15.1%) for the nine months ended September 30, 2025, compared to the prior year. This rise, alongside a $531 million (35.0%) increase in SG&A expenses, contributed to pressure on operating income despite higher revenues.
• Rising Interest Expense [high — financial]: Interest expense, net, more than doubled to $689 million for the nine months ended September 30, 2025, from $397 million in the prior year. This significant increase negatively impacted net income, offsetting revenue growth.
• Divestiture and Impairment Charges [medium — financial]: The company recorded a net gain of $239 million from divestitures, asset impairments, and unusual items for the nine months ended September 30, 2025, up from $62 million in the prior year. While a gain, these items can introduce volatility and mask underlying operational performance.
• Depreciation and Amortization Increase [medium — operational]: Depreciation, depletion, and amortization expenses rose by $478 million (29.6%) for the nine months ended September 30, 2025. This increase is likely related to ongoing investments in property and equipment, which grew to $20,069 million.
• Reduced Cash Position [medium — financial]: Cash and cash equivalents decreased significantly from $414 million at December 31, 2024, to $175 million as of September 30, 2025. This reduction warrants monitoring, especially given increased operating activities.
• Landfill and Environmental Liabilities [medium — regulatory]: Landfill and environmental remediation liabilities stand at $3,132 million. Changes in environmental regulations or unforeseen remediation needs could impact future financial performance and cash flows.

Industry Context

The waste management industry is characterized by stable demand driven by essential services, but faces increasing regulatory scrutiny and capital intensity. Companies like WM operate in a consolidated market with significant barriers to entry due to infrastructure requirements and permits. Trends include a growing focus on recycling, renewable energy from landfills, and sustainable waste solutions, requiring continuous investment in technology and facilities.

Regulatory Implications

WM operates under stringent environmental regulations related to landfill operations, emissions, and waste disposal. Changes in these regulations, particularly concerning climate change and recycling mandates, could increase compliance costs and operational complexity. The company's significant landfill and environmental remediation liabilities ($3,132 million) highlight the ongoing financial exposure to these regulatory requirements.

What Investors Should Do

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Glossary

Goodwill

An intangible asset that arises when one company acquires another for a price greater than the fair market value of its net identifiable assets. (Goodwill increased to $13,894 million from $13,438 million, indicating potential acquisitions or revaluation of existing ones.)

Accumulated other comprehensive income (loss)

Includes unrealized gains and losses on certain investments, foreign currency translation adjustments, and pension adjustments that are not included in net income. (This account showed a loss of $31 million, an improvement from a loss of $115 million, suggesting some positive movements in these less liquid items.)

Noncontrolling interests

The portion of equity interest in a subsidiary that is not attributable to the parent company. (This is a very small amount (1 million), indicating WM has full control over its consolidated entities.)

Depreciation, depletion and amortization

The systematic allocation of the cost of tangible and intangible assets over their useful lives. (This expense increased significantly by $478 million, impacting operating income and reflecting investments in assets.)

Gain (loss) from divestitures, asset impairments and unusual items, net

Reflects one-time or infrequent events such as the sale of assets, write-downs of asset values, or other non-recurring charges or gains. (This line item increased substantially to $239 million, impacting net income and potentially masking underlying operational trends.)

Year-Over-Year Comparison

Waste Management, Inc. reported a strong 16.8% increase in operating revenues to $18,891 million for the nine months ended September 30, 2025, compared to the prior year. However, this top-line growth was overshadowed by a significant 8.4% decline in net income to $1,966 million. Key factors contributing to this margin compression include a substantial rise in interest expense (up $292 million) and increased operating and SG&A costs. New risks or increased severity of existing ones related to higher interest expenses and volatile divestiture gains are apparent.

Key Financial Figures

• $0.01 — ge on Which Registered Common Stock , $0.01 par value WM New York Stock Exchang
• $3.5 billion — nd Canadian revolving credit facility ("$3.5 billion revolving credit facility"), as discuss
• $3.5 Billion — acilities and Commercial Paper Program $3.5 Billion Revolving Credit Facility — Our $ 3.5 b

Filing Documents

• wm-20250930x10q.htm (10-Q) — 3076KB
• wm-20250930xex22d1.htm (EX-22.1) — 49KB
• wm-20250930xex31d1.htm (EX-31.1) — 13KB
• wm-20250930xex31d2.htm (EX-31.2) — 13KB
• wm-20250930xex32d1.htm (EX-32.1) — 8KB
• wm-20250930xex32d2.htm (EX-32.2) — 8KB
• wm-20250930xex95.htm (EX-95) — 4KB
• 0001104659-25-103136.txt ( ) — 11902KB
• wm-20250930.xsd (EX-101.SCH) — 45KB
• wm-20250930_cal.xml (EX-101.CAL) — 80KB
• wm-20250930_def.xml (EX-101.DEF) — 249KB
• wm-20250930_lab.xml (EX-101.LAB) — 467KB
• wm-20250930_pre.xml (EX-101.PRE) — 356KB
• wm-20250930x10q_htm.xml (XML) — 2777KB

Financial Statements

Item 1. Financial Statements. WASTE MANAGEMENT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In Millions, Except Share and Par Value Amounts) September 30, December 31, 2025 2024 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 175 $ 414 Accounts receivable, net of allowance for doubtful accounts of $ 122 and $ 165 , respectively 3,397 3,272 Other receivables, net of allowance for doubtful accounts of $ 3 and $ 4 , respectively 620 415 Parts and supplies 223 206 Other current assets 424 467 Total current assets 4,839 4,774 Property and equipment, net of accumulated depreciation and depletion of $ 24,781 and $ 23,777 , respectively 20,069 19,340 Goodwill 13,894 13,438 Other intangible assets, net 3,873 4,188 Restricted funds 541 413 Investments in unconsolidated entities 791 846 Other long-term assets 1,601 1,568 Total assets $ 45,608 $ 44,567 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 2,082 $ 2,046 Accrued liabilities 2,077 2,180 Deferred revenues 698 673 Current portion of long-term debt 880 1,359 Total current liabilities 5,737 6,258 Long-term debt, less current portion 22,482 22,541 Deferred income taxes 3,025 2,815 Landfill and environmental remediation liabilities 3,132 3,048 Other long-term liabilities 1,712 1,651 Total liabilities 36,088 36,313 Commitments and contingencies (Note 6) Equity: Waste Management, Inc. stockholders' equity: Common stock, $ 0.01 par value; 1,500,000,000 shares authorized; 630,282,461 shares issued 6 6 Additional paid-in capital 5,640 5,496 Retained earnings 16,823 15,858 Accumulated other comprehensive income (loss) ( 31 ) ( 115 ) Treasury stock at cost, 227,420,930 and 228,788,284 shares, respectively ( 12,919 ) ( 12,993 ) Total Waste Management, Inc. stockholders' equity 9,519 8,252 Nonc