Waste Management Affirms 2026 Outlook After Adjusted EBITDA Margin Compression

The Tip Desk · October 30, 2026 · 3 min read

Adjusted operating EBITDA was $2,121 million in the third quarter, up 5.8% from a year earlier, as Healthcare Solutions income from operations rose $41 million.

Waste Management (WM) reported third-quarter revenue of $6,846 million, up 6.3% from a year earlier, as year-over-year growth accelerated from 4.0% in the second quarter.

The Houston-based environmental-services company said core price contributed 5.8% and Collection and Disposal yield 3.4%. It also cited increased energy surcharges and higher volumes in recycling and renewable energy from completed growth projects.

Adjusted operating EBITDA rose 5.8% to $2,121 million, slightly above the 5.5% adjusted growth reported for the second quarter. Adjusted operating EBITDA margin compressed 10 basis points year over year to 31.0%, after expanding 40 basis points in the second quarter.

Chief Executive Jim Fish said the company delivered results in line with expectations and that adjusted operating EBITDA growth was driven by strong price-to-cost spread in Collection and Disposal and growing contributions from healthcare and sustainability businesses.

Collection and Disposal volume declined 0.4%, or 0.5% on a workday-adjusted basis, a narrower drop than the 1.8% decline in the second quarter. The company said volumes continued to be affected by intentional shedding of lower-margin residential business and commercial declines largely related to prior national-account broker losses.

Operating expenses were 59.8% of revenue, compared with 58.9% a year earlier. Collection and Disposal operating efficiency improved 40 basis points, which the company said was more than offset by 130 basis points of dilution primarily related to higher fuel costs and increased risk-management costs. Favorable price-to-cost spread in Collection and Disposal contributed 40 basis points to adjusted operating EBITDA margin, and Healthcare Solutions added another 30 basis points. Those contributions were more than offset by 40 basis points related to higher fuel costs and 40 basis points related to increased risk-management costs.

SG&A expenses were 9.6% of revenue, or 9.3% on an adjusted basis, a 70-basis-point improvement both on a reported and adjusted basis from the prior year, after a 60-basis-point improvement in the second quarter. The company attributed the improvement to cost discipline and continued synergy capture in Healthcare Solutions.

Healthcare Solutions revenue grew 3.7% and income from operations increased $41 million, with operating EBITDA up more than 30%. Fish said that result was driven by effective cost management, synergy capture, and pricing growth.

Net income attributable to Waste Management was $820 million, or $2.05 a share, compared with $603 million, or $1.49 a share, a year earlier. Adjusted net income was $858 million, or $2.15 a share.

Through the first nine months of 2026, the company generated $4.87 billion of net cash provided by operating activities, a 12.0% increase from the prior-year period. Free cash flow was $3.01 billion, compared with $2.11 billion a year earlier. Conversion of adjusted operating EBITDA to free cash flow was 50% in the first nine months.

The company returned $957 million to shareholders in the third quarter, consisting of $580 million in share repurchases and $377 million in cash dividends. Returns in the first nine months exceeded $2.72 billion, which the company said was more than 90% of free cash flow generated during the period. It repurchased $1.58 billion of shares in the first nine months and continues to expect to repurchase a total of $2 billion of shares in 2026.

During the quarter, WM began operations at a new renewable natural gas facility in New York, its eighteenth new facility completed since 2022.

The company is affirming its 2026 guidance ranges. It expects revenue at the high end of $26.275 billion to $26.475 billion, adjusted operating EBITDA within $8.15 billion to $8.25 billion, and free cash flow at the high end of $3.75 billion to $3.85 billion.