Waste Mgmt 2025-26: 30.1% Margin, $3B Buyback Authorized
FY25 revenue $25.20B (+14%); Op income $4.61B (+11%); NI $2.71B (-1%); EPS $6.70 (-2%). FCF $2.82B (+30%). Legacy Business operating EBITDA margin expanded to 30.1%. FY26 guide: EBITDA growth +6.2% midpoint (+7.4% normalized for wildfire cleanup), FCF +30%, dividend +14.5%, $3B buyback authorized, ~$3.5B total capital return.
Key takeaways
- Headline EPS down but underlying earnings power up. Revenue +14% to $25.2B reflects FY24 Stericycle acquisition annualizing through. EPS dipped to $6.70 (-2%) on integration costs + interest from deal financing — not a deterioration of underlying earnings power. Legacy Business operating EBITDA margin expanded to 30.1%, the structural read.
- FCF surged +30% to $2.82B. Working capital release + capex moderation + cleanup of acquired-business cash flow timing. The cleanest signal in the print.
- Capital return inflection in FY26. Mgmt announced 14.5% dividend increase + $3B share repurchase program. Combined ~$3.5B return to shareholders FY26 — meaningfully above FY25's ~$1.3B (dividends only). Buybacks back after years of debt-priority allocation.
- Stericycle integration on track. Healthcare Solutions segment progress: customer call volume trending down, SG&A reduced. Cross-selling Healthcare medical waste into Legacy commercial accounts is the FY26-27 lever.
- Pricing + cost optimization remain core. Collection & disposal pricing held mid-single-digit positive; repair & maintenance + labor costs improved as % of revenue. Sustainability investments (recycling + RNG) on schedule.
Business
Waste Management is the largest residential, commercial, and industrial waste collection + disposal + recycling company in North America. Segments:
- Legacy Business (~88% of revenue): Collection (residential + commercial + industrial), transfer, disposal (landfill), and recycling. Approximately 250 active landfills, 350 transfer stations, recycling facilities, and a fleet of ~26,000+ collection vehicles. Customers ~21M residential + 600K commercial + industrial across 41 states + 7 Canadian provinces. The cash-cow with 30.1% operating EBITDA margin.
- WM Healthcare Solutions (~12% of revenue, post-Stericycle close 2024): Medical waste, secure paper shredding, regulated waste pickup. Acquired late FY24 in $7.2B deal; the FY25 print is the first full year of integration. Synergies on track per management.
Capital intensity profile: WM operates ~250 active landfills with permitted air space + permitted expansions — these are essentially irreplaceable assets in most US markets due to NIMBY + permitting constraints. The combination of fleet + landfill + recycling + medical waste creates the most defensible footprint in the category.
Sustainability portfolio: WM is investing in renewable natural gas (RNG) facilities (capturing methane from landfill gas + selling as transportation fuel under low-carbon-fuel-standard credits) + recycling infrastructure (single-stream MRFs). FY25 sustainability capex was a meaningful slug of total capex.
FY25 financial performance
| Metric (FY) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue ($B) | 20.43 | 22.06 | 25.20 |
| Gross profit ($B) | 5.75 | 6.41 | 7.33 |
| Op income ($B) | 3.82 | 4.15 | 4.61 |
| Op margin | 18.7% | 18.8% | 18.3% |
| EBITDA ($B) | 5.72 | 6.46 | 7.20 |
| Net income ($B) | 2.30 | 2.75 | 2.71 |
| Diluted EPS ($) | 5.66 | 6.81 | 6.70 |
| FCF ($B) | 1.82 | 2.16 | 2.82 |
| Capex ($B) | -2.90 | -3.23 | -3.23 |
| Total debt ($B) | 16.23 | 23.90 | 22.91 |
| Dividends ($B) | -1.14 | -1.21 | -1.33 |
| Buyback ($M) | -1,302 | -262 | 0 |
Three observations:
- Operating margin compressed slightly to 18.3% (vs 18.8% FY24) — the dilution is Stericycle (lower-margin) annualizing into the base. Legacy Business margin expanded to 30.1% on operating EBITDA basis.
- Capex held at $-3.23B despite revenue growth — capital intensity declined to 12.8% of revenue (from 14.6% FY24). Sustainability investments + RNG facility build-out continued.
- Total debt down $1.0B YoY from peak $23.9B post-Stericycle. Deleveraging cadence on track.
- Buybacks resumed in FY26 ($3B authorization announced) after 2-year pause for Stericycle integration.
Capital allocation
- Capex: $-3.23B FY25 (12.8% of revenue). Sustainability + fleet + landfill expansion.
- Dividends: $-1.33B FY25 (+10% YoY). FY26: 14.5% rate increase. Yield consistency.
- Buybacks: $0 FY25 (prioritizing Stericycle deleveraging). FY26: $3B authorization announced.
- M&A: Stericycle ($7.2B, closed late FY24) — the dominant capital event of the cycle. Bolt-on tuck-ins continued at smaller scale.
- Total FY26 shareholder return:
$3.5B planned ($1.5B div + $3B buyback over multi-year program / ~$1B-$1.5B annual buyback pace).
FY26 outlook (per Q4 2025 call, 2026-01-29)
| FY26 guide | Range |
|---|---|
| Operating EBITDA growth | +6.2% midpoint (+7.4% normalized for wildfire cleanup) |
| FCF growth | ~+30% midpoint |
| Dividend rate increase | 14.5% (effective 2026) |
| Buyback authorization | $3B (multi-year) |
| Total capital return FY26 | ~$3.5B |
The +6.2% headline EBITDA growth is moderated by the unusual FY25 wildfire cleanup contracts that don't repeat — normalized growth is +7.4%. Underlying drivers: Legacy Business pricing + volume + margin expansion + Stericycle synergies + RNG facility ramps.
The +30% FCF growth is the cleanest expansion line: combination of operating EBITDA growth + working capital normalization + capex efficiency + lower interest expense as Stericycle debt amortizes.
Key risks
- Recycling commodity prices: WM's recycling revenue is partly tied to OCC (cardboard) + plastic pellet prices. Commodity volatility flows to revenue.
- Stericycle integration: Year-1 of full integration. Synergy delivery + customer retention required to validate $7.2B deal.
- Labor cost: Driver + technician labor inflation is the structural cost pressure. Pricing must keep pace.
- Landfill regulation: PFAS treatment requirements + EPA methane regulations could require capex above current planning.
- Diesel fuel cost: Fleet operating cost is sensitive to diesel; pricing surcharges generally offset but with lag.
- Customer concentration in commercial: Recession would compress commercial volumes (residential is more recession-resistant).
Bottom line
WM FY25 is the integration year for Stericycle disguised as a 14% revenue print. Underlying Legacy Business margin reached 30.1%, FCF surged +30%, and capital return is set to step up materially in FY26 with $3B buyback + 14.5% dividend hike. The durable thesis: ~250 landfills with permitted air space, regulatory moat, scaled fleet, RNG monetization upside, and now Stericycle medical waste cross-sell. Risk profile is low (regulated essential service); upside profile depends on Stericycle synergy delivery + RNG facility ramps + Healthcare segment cross-sell.
Citations
- Waste Management Inc. FY25 Form 10-K (filed February 2026, SEC EDGAR).
- Waste Management Q4 2025 earnings call, 2026-01-29 — operating EBITDA margin (Legacy 30.1%), FY26 guide (+6.2% EBITDA, +30% FCF, 14.5% dividend hike, $3B buyback authorization).
- Stericycle acquisition disclosure ($7.2B closed late FY24).
- Internal financial_statements view (consolidated annual + cash flow + capital return).