Waste Management Margins Widen as Revenue Growth Cools
Waste Management posted adjusted operating EBITDA margin of 30.9% in the second quarter, even as revenue growth slowed to 4.0%.
Waste Management (WM) reported second-quarter revenue of $6.684 billion, up 4.0% from a year earlier, as the trash hauler and recycler continued to expand profit margins despite slowing top-line growth.
The deceleration marks a shift from the pattern of the past year. Revenue growth slowed from 3.5% in the first quarter, core price eased to 5.7% from 6.3%, and collection-and-disposal volume fell 1.8%, a steeper decline than the first quarter's 1.5% drop. Residential volume losses improved sequentially by 210 basis points as the company slowed its intentional shedding of lower-margin business, a sign that the volume pressure is easing even as it persists.
Adjusted operating EBITDA rose 5.5% year over year, or 9.1% excluding prior-year wildfire cleanup contributions, down from 5.9% growth in the first quarter. Total company adjusted operating EBITDA margin reached 30.9%, up 40 basis points from a year earlier but a smaller gain than the 70-basis-point expansion reported in the first quarter. Adjusted SG&A expense margin improved 60 basis points to 9.9% of revenue, helping offset the softer volume and pricing trends. Diluted earnings per share rose to $1.95 as reported and $2.02 adjusted, up from $1.80 and $1.92 a year earlier, extending the acceleration seen in the first quarter's results of $1.79 and $1.81 versus $1.58 and $1.67 a year earlier.
The collection-and-disposal segment, the company's core hauling and landfill business, added $104 million in reported operating EBITDA and $79 million on an adjusted basis, versus $154 million and $118 million in the first quarter. Combined recycling and renewable energy operating EBITDA grew $39 million reported and $40 million adjusted, a 32.5% increase, even as single-stream recycled commodity pricing fell to about $75 a ton from about $84 a year earlier and natural gas prices received dropped to $2.23 per MMBtu from $2.81. Healthcare Solutions operating EBITDA grew $25 million reported and $11 million adjusted, a sharp slowdown from 18.4% reported and 11.6% adjusted growth in the first quarter.
Net cash from operating activities rose 11.6% to $1.73 billion, a smaller increase than the first quarter's 24% jump to $1.5 billion, while free cash flow climbed 34.5% to $1.10 billion, moderating from the near-doubling to $920 million reported in the first quarter. Waste Management returned $1.04 billion to shareholders in the quarter, including $659 million in share repurchases and $379 million in dividends, up from $729 million returned in the first quarter.
Waste Management lowered its 2026 revenue guidance by about 0.6% to a range of $26.275 billion to $26.475 billion, citing lower volume expectations partially offset by higher energy surcharges, while reaffirming its adjusted operating EBITDA and free cash flow guidance. The company raised its adjusted operating EBITDA margin guidance by 20 basis points to a range of 31.0% to 31.2%, a move that came despite the revenue cut and points to confidence in cost and pricing execution through the back half of the year.
The results extend a trend that began with full-year 2025, when adjusted operating EBITDA margin exceeded 30% for the first time and Healthcare Solutions margin climbed to 16.9% adjusted from 1.0% reported in 2024. The pace of EBITDA growth that drove those gains, 15.5% adjusted for full-year 2025, has since slowed to single digits in both the first and second quarters of 2026. The company also began reclassifying landfill accretion expense from operating expenses to depreciation, depletion and amortization starting in 2026, restating prior-year comparatives to $36 million for the second quarter of 2025 against $39 million in the current quarter.