WASTE MANAGEMENT INC Q1 FY2026 earnings call

• WM team delivered strong Q1 results with 6% growth in operating EBITDA. - Advanced four strategic priorities: collection/disposal growth, sustainability investments yielding returns, healthcare solutions advancing towards accretive growth, strong capital allocation with free cash flow generation. - Collection/disposal business saw 6.4% operating EBITDA growth. - Renewable energy operating EBITDA more than doubled. - Recycling operating EBITDA grew 18% despite commodity price decline. - Healthcare solutions operating EBITDA grew nearly 12%, with expected revenue inflection in second half. - Strong free cash flow generation with $920M in Q1, returning $730M to shareholders.

Collection and disposal business: 6.4% operating EBITDA growth, supported by customer lifetime value, operational excellence. Renewable energy: operating EBITDA more than doubled in the quarter, driven by seven new renewable natural gas facilities. Recycling: despite 27% decline in single stream commodities pricing, operating EBITDA grew 18% due to automation benefits. Healthcare solutions: operating EBITDA grew nearly 12% in the quarter, with expected revenue growth inflection in second half of 2026.

• Confident in achieving full-year financial guidance. - Expect revenue growth inflection in healthcare solutions in second half of 2026 as ERP stabilizes. - Free cash flow generation expected to continue, with Q1 free cash flow nearly doubling. - Sustainability capital expenditure program on track to be substantially complete in 2026.

• External factors affecting volume, such as winter weather impacts. - Geopolitical issues affecting recycling commodities pricing and freight. - Regulatory risks impacting operations. - Weather-related disruptions affecting facilities and volumes.

Q: Unpack strong margin performance despite lower volumes and volume cadence.

A: Margin trajectory for back half, weather impact on volume, special waste, MSW, industrial volumes trends.

Q: Comments on tough margin comp in 2Q.

A: Wildfire volume impact, margin improvement in Q1 and Q2 but muted by landfill volume.

Q: Magnitude of increase in corporate expense.

A: Health and welfare component, annual incentive compensation, wage increases, technology costs, normalized rate for rest of year.

Q: Surcharges for rising fuel costs.

A: Almost real time, little drag on EBITDA.

Q: Recycling commodity pricing.

A: 80% of commodities stay domestic, tracking freight costs in Middle East.

Q: Healthcare cross-selling and synergies.

A: Cross-selling benefits, on track for 300M synergies, potentially ahead.

Q: AI and new technologies in WM.

A: Embedded in business, benefits in recycling, routing, logistics, safety.

Q: Safety performance sustainability.

A: Slow and steady improvement, recordable injury rate under 3, translating to positive risk.

Q: Renewable energy segment contributions.

A: Almost doubled production, 80% volume locked in, higher pricing.

Q: Healthcare revenue growth and ERP.

A: ERP stabilization leading to revenue growth, credits peaking, volume improvement expected.

Q: Price vs volume opportunity in healthcare.

A: Price good, volume expected to improve, front half soft, back half better.

Q: Sustainability margin and Turkey.

A: Strong margin improvement, on track for recycling margin expansion, renewable energy margin expected to tick up.

Q: Special waste as leading indicator.

A: Special waste is leading indicator of broader macro, pipeline materializing.

Q: Collection disposal pricing and CPI.

A: 40-45% revenue based on index, two-quarter lag for CPI impact, Resi and MSW ahead of expectations.

Q: Renewable energy and EPA RVO.

A: Slightly raised RVO, prices hold, 80% volume locked in, confident in selling all volume.

Q: Recycled plastics market.

A: Tracking plastics market, no significant benefit yet, not changing tune on shuttered facilities.