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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2024

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-12154

Waste Management, Inc.

(Exact name of registrant as specified in its charter)

Delaware

73-1309529

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

800 Capitol Street

Suite 3000

Houston, Texas 77002

(Address of principal executive offices)

(713) 512-6200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

    

Trading Symbol

    

Name of Each Exchange on Which Registered

Common Stock, $0.01 par value

WM

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes    No  

The number of shares of Common Stock, $0.01 par value, of the registrant outstanding at July 22, 2024 was 401,314,827 (excluding treasury shares of 228,967,634).

PART I.

Item 1.    Financial Statements.

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Millions, Except Share and Par Value Amounts)

June 30, 

December 31, 

    

2024

    

2023

(Unaudited)

ASSETS

Current assets:

 

 

  

Cash and cash equivalents

$

172

$

458

Accounts receivable, net of allowance for doubtful accounts of $29 and $30, respectively

 

2,728

 

2,633

Other receivables, net of allowance for doubtful accounts of $4 and $4, respectively

 

252

 

237

Parts and supplies

 

183

 

173

Other current assets

 

1,104

 

303

Total current assets

 

4,439

 

3,804

Property and equipment, net of accumulated depreciation and depletion of $23,310 and $22,826, respectively

 

17,420

 

16,968

Goodwill

 

9,363

 

9,254

Other intangible assets, net

 

753

 

759

Restricted funds

 

465

 

422

Investments in unconsolidated entities

 

552

 

606

Other long-term assets

 

1,007

 

1,010

Total assets

$

33,999

$

32,823

LIABILITIES AND EQUITY

Current liabilities:

 

  

 

  

Accounts payable

$

1,785

$

1,709

Accrued liabilities

 

1,525

 

1,605

Deferred revenues

 

584

 

578

Current portion of long-term debt

 

242

 

334

Total current liabilities

 

4,136

 

4,226

Long-term debt, less current portion

 

16,501

 

15,895

Deferred income taxes

 

1,826

 

1,826

Landfill and environmental remediation liabilities

 

2,936

 

2,888

Other long-term liabilities

 

1,149

 

1,092

Total liabilities

 

26,548

 

25,927

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

 

5,433

 

5,351

Retained earnings

 

15,104

 

14,334

Accumulated other comprehensive (loss) income

 

(73)

 

(37)

Treasury stock at cost, 229,183,391 and 228,827,218 shares, respectively

 

(13,013)

 

(12,751)

Total Waste Management, Inc. stockholders’ equity

 

7,457

 

6,903

Noncontrolling interests

 

(6)

 

(7)

Total equity

 

7,451

 

6,896

Total liabilities and equity

$

33,999

$

32,823

See Notes to Condensed Consolidated Financial Statements.

2

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Millions, Except per Share Amounts)

(Unaudited)

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2024

    

2023

    

2024

    

2023

Operating revenues

$

5,402

$

5,119

$

10,561

$

10,011

Costs and expenses:

 

  

 

  

Operating

 

3,291

 

3,186

 

6,431

 

6,272

Selling, general and administrative

 

501

 

467

 

992

 

943

Depreciation, depletion and amortization

 

543

 

521

 

1,057

 

1,026

Restructuring

 

 

1

 

 

4

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

 

58

 

 

56

 

(3)

 

4,393

 

4,175

 

8,536

 

8,242

Income from operations

 

1,009

 

944

 

2,025

 

1,769

Other income (expense):

 

  

 

Interest expense, net

 

(136)

 

(125)

 

(266)

 

(245)

Equity in net income (losses) of unconsolidated entities

 

22

 

(12)

 

3

 

(23)

Other, net

 

(1)

 

2

 

1

 

4

 

(115)

 

(135)

 

(262)

 

(264)

Income before income taxes

 

894

 

809

 

1,763

 

1,505

Income tax expense

 

214

 

196

 

376

 

360

Consolidated net income

 

680

 

613

 

1,387

 

1,145

Less: Net income (loss) attributable to noncontrolling interests

 

 

(2)

 

(1)

 

(3)

Net income attributable to Waste Management, Inc.

$

680

$

615

$

1,388

$

1,148

Basic earnings per common share

$

1.70

$

1.52

$

3.46

$

2.82

Diluted earnings per common share

$

1.69

$

1.51

$

3.44

$

2.81

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Millions)

(Unaudited)

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2024

    

2023

    

2024

    

2023

Consolidated net income

$

680

$

613

$

1,387

$

1,145

Other comprehensive income (loss), net of tax:

 

  

 

  

 

  

 

  

Derivative instruments, net

 

(1)

 

6

 

(1)

 

11

Available-for-sale securities, net

 

(1)

 

 

 

5

Foreign currency translation adjustments

 

(10)

 

20

 

(34)

 

22

Post-retirement benefit obligations, net

 

(1)

(1)

 

(1)

 

(1)

Other comprehensive income (loss), net of tax

 

(13)

25

 

(36)

 

37

Comprehensive income

 

667

 

638

 

1,351

 

1,182

Less: Comprehensive income (loss) attributable to noncontrolling interests

 

(2)

 

(1)

 

(3)

Comprehensive income attributable to Waste Management, Inc.

$

667

$

640

$

1,352

$

1,185

See Notes to Condensed Consolidated Financial Statements.

3

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions)

(Unaudited)

Six Months Ended

June 30, 

    

2024

    

2023

Cash flows from operating activities:

 

 

  

  

Consolidated net income

 

$

1,387

$

1,145

Adjustments to reconcile consolidated net income to net cash provided by operating activities:

 

 

  

Depreciation, depletion and amortization

 

1,057

 

1,026

Deferred income tax expense (benefit)

 

14

 

31

Interest accretion on landfill and environmental remediation liabilities

 

66

 

65

Provision for bad debts

 

26

 

20

Equity-based compensation expense

 

57

 

47

Net gain on disposal of assets

 

(50)

 

(20)

(Gain) loss from divestitures, asset impairments and other, net

 

56

 

(3)

Equity in net (income) losses of unconsolidated entities, net of dividends

 

(3)

 

23

Change in operating assets and liabilities, net of effects of acquisitions and divestitures:

 

  

 

  

Receivables

 

(127)

 

(105)

Other current assets

 

(30)

 

(29)

Other assets

 

63

 

43

Accounts payable and accrued liabilities

 

85

 

(22)

Deferred revenues and other liabilities

 

(80)

 

(147)

Net cash provided by operating activities

 

2,521

 

2,074

Cash flows from investing activities:

 

  

 

  

Acquisitions of businesses, net of cash acquired

 

(243)

 

(118)

Capital expenditures

 

(1,335)

 

(1,180)

Proceeds from divestitures of businesses and other assets, net of cash divested

 

58

 

46

Other, net

 

(839)

 

(87)

Net cash used in investing activities

 

(2,359)

 

(1,339)

Cash flows from financing activities:

 

  

 

  

New borrowings

 

9,180

 

11,356

Debt repayments

 

(8,752)

 

(11,074)

Common stock repurchase program

 

(262)

 

(620)

Cash dividends

 

(608)

 

(572)

Exercise of common stock options

 

36

 

25

Tax payments associated with equity-based compensation transactions

 

(48)

 

(28)

Other, net

 

(10)

 

(6)

Net cash used in financing activities

 

(464)

 

(919)

Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents

 

(4)

 

2

(Decrease) increase in cash, cash equivalents and restricted cash and cash equivalents

 

(306)

 

(182)

Cash, cash equivalents and restricted cash and cash equivalents at beginning of period

 

552

 

445

Cash, cash equivalents and restricted cash and cash equivalents at end of period

 

$

246

$

263

Reconciliation of cash, cash equivalents and restricted cash and cash equivalents at end of period:

Cash and cash equivalents

$

172

$

144

Restricted cash and cash equivalents included in other current assets

4

43

Restricted cash and cash equivalents included in restricted funds

70

76

Cash, cash equivalents and restricted cash and cash equivalents at end of period

 

$

246

$

263

See Notes to Condensed Consolidated Financial Statements.

4

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Millions, Except Shares in Thousands)

(Unaudited)

Waste Management, Inc. Stockholders’ Equity

Accumulated

Additional

Other

Common Stock

Paid-In

Retained

Comprehensive

Treasury Stock

Noncontrolling

  

Total

  

Shares

  

Amounts

  

Capital

  

Earnings

  

(Loss) Income 

  

Shares

  

Amounts

  

Interests

Three Months Ended June 30:

2024

Balance, March 31, 2024

$

7,078

630,282

$

6

$

5,352

$

14,738

$

(60)

 

(228,980)

$

(12,954)

$

(4)

Consolidated net income

 

680

680

Other comprehensive income (loss), net of tax

 

(13)

(13)

Cash dividends declared of $0.75 per common share

 

(301)

(301)

Equity-based compensation transactions, net

 

31

29

(1)

62

3

Common stock repurchase program

 

(12)

50

(266)

(62)

Adoption of new accounting standard

(12)

(12)

Other, net

 

2

1

(2)

Balance, June 30, 2024

$

7,451

630,282

$

6

$

5,433

$

15,104

$

(73)

 

(229,183)

$

(13,013)

$

(6)

2023

Balance, March 31, 2023

$

6,808

630,282

$

6

$

5,244

$

13,414

$

(57)

 

(223,491)

$

(11,813)

$

14

Consolidated net income

 

613

 

 

 

615

 

 

 

 

(2)

Other comprehensive income (loss), net of tax

 

25

 

 

 

 

25

 

 

 

Cash dividends declared of $0.70 per common share

 

(283)

 

 

 

(283)

 

 

 

 

Equity-based compensation transactions, net

 

33

 

 

27

 

(2)

 

 

157

 

8

 

Common stock repurchase program

 

(275)

 

 

70

 

 

 

(2,074)

 

(345)

 

Other, net

 

7

 

 

 

 

 

1

 

 

7

Balance, June 30, 2023

$

6,928

630,282

$

6

$

5,341

$

13,744

$

(32)

 

(225,407)

$

(12,150)

$

19

See Notes to Condensed Consolidated Financial Statements.

5

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ─ (Continued)

(In Millions, Except Shares in Thousands)

(Unaudited)

Waste Management, Inc. Stockholders’ Equity

Accumulated

Additional

Other

Common Stock

Paid-In

Retained

Comprehensive

Treasury Stock

Noncontrolling

Total

  

Shares

  

Amounts

  

Capital

  

Earnings

  

(Loss) Income 

  

Shares

  

Amounts

  

Interests

Six Months Ended June 30:

2024

Balance, December 31, 2023

$

6,896

630,282

$

6

$

5,351

$

14,334

$

(37)

 

(228,827)

$

(12,751)

$

(7)

Consolidated net income

 

1,387

 

 

 

1,388

 

 

 

 

(1)

Other comprehensive income (loss), net of tax

 

(36)

 

 

 

 

(36)

 

 

 

Cash dividends declared of $1.50 per common share

 

(608)

 

 

 

(608)

 

 

 

 

Equity-based compensation transactions, net

 

82

 

 

17

 

2

 

 

1,137

 

63

 

Common stock repurchase program

 

(265)

 

 

60

 

 

 

(1,494)

 

(325)

 

Adoption of new accounting standard

(12)

(12)

Other, net

 

7

 

 

5

 

 

 

1

 

 

2

Balance, June 30, 2024

$

7,451

630,282

$

6

$

5,433

$

15,104

$

(73)

 

(229,183)

$

(13,013)

$

(6)

2023

Balance, December 31, 2022

$

6,864

630,282

$

6

$

5,314

$

13,167

$

(69)

 

(222,396)

$

(11,569)

$

15

Consolidated net income

 

1,145

 

 

 

1,148

 

 

 

 

(3)

Other comprehensive income (loss), net of tax

 

37

 

 

 

 

37

 

 

 

Cash dividends declared of $1.40 per common share

 

(572)

 

 

 

(572)

 

 

 

 

Equity-based compensation transactions, net

 

75

 

 

27

 

1

 

 

923

 

47

 

Common stock repurchase program

 

(628)

 

 

 

 

 

(3,936)

 

(628)

 

Other, net

 

7

 

 

 

 

 

2

 

 

7

Balance, June 30, 2023

$

6,928

630,282

$

6

$

5,341

$

13,744

$

(32)

 

(225,407)

$

(12,150)

$

19

See Notes to Condensed Consolidated Financial Statements.

6

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.    Basis of Presentation

The financial statements presented in this report represent the consolidation of Waste Management, Inc., a Delaware corporation; its wholly-owned and majority-owned subsidiaries; and certain variable interest entities for which Waste Management, Inc. or its subsidiaries are the primary beneficiaries as described in Note 13. Waste Management, Inc. is a holding company and all operations are conducted by its subsidiaries. When the terms “the Company,” “we,” “us” or “our” are used in this document, those terms refer to Waste Management, Inc., together with its consolidated subsidiaries and consolidated variable interest entities. When we use the term “WMI,” we are referring only to Waste Management, Inc., the parent holding company.

We are North America’s leading provider of comprehensive environmental solutions, providing services throughout the United States (“U.S.”) and Canada. We partner with our customers and the communities we serve to manage and reduce waste at each stage from collection to disposal, while recovering valuable resources and creating clean, renewable energy. Our business is operated and managed locally by our subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, and recycling and resource recovery services. Through our subsidiaries, including our Waste Management Renewable Energy (“WM Renewable Energy”) business, we are also a leading developer, operator and owner of landfill gas-to-energy facilities in the U.S. and Canada that produce renewable electricity and renewable natural gas (“RNG”), which is a significant source of fuel that we allocate to our natural gas fleet.

Our senior management evaluates, oversees and manages the financial performance of our business through four reportable segments, referred to as (i) Collection and Disposal - East Tier (“East Tier”); (ii) Collection and Disposal - West Tier (“West Tier”); (iii) Recycling Processing and Sales and (iv) WM Renewable Energy. Our East and West Tier, along with certain ancillary services (“Other Ancillary”) not managed through our Tier segments, but that support our collection and disposal operations, form our “Collection and Disposal” businesses. We also provide additional services not managed through our four reportable segments, which are presented as Corporate and Other. Refer to Note 7 for further discussion.

The Condensed Consolidated Financial Statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 are unaudited. In the opinion of management, these financial statements include all adjustments, which, unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, comprehensive income, cash flows, and changes in equity for the periods presented. The results for interim periods are not necessarily indicative of results for the entire year. The financial statements presented herein should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

In preparing our financial statements, we make numerous estimates and assumptions that affect the accounting for and recognition and disclosure of assets, liabilities, equity, revenues and expenses. We must make these estimates and assumptions because certain information that we use is dependent on future events, cannot be calculated with precision from available data or simply cannot be calculated. In some cases, these estimates are difficult to determine, and we must exercise significant judgment. In preparing our financial statements, the most difficult, subjective and complex estimates and the assumptions that present the greatest amount of uncertainty relate to our accounting for landfills, environmental remediation liabilities, long-lived asset impairments, intangible asset impairments and the fair value of assets and liabilities acquired in business combinations. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements.

Revenue Recognition

We generally recognize revenue as services are performed or products are delivered. For example, revenue typically is recognized as waste is collected, tons are received at our landfills or transfer stations, or recycling and other commodities,

7

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

such as RNG, electricity and capacity, Renewable Identification Numbers (“RINs”) and Renewable Energy Credits (“RECs”), are sold.

We also bill for certain services prior to performance. Such services include, among others, certain commercial and residential contracts, and equipment rentals. These advanced billings are included in deferred revenues and recognized as revenue in the period service is provided. Substantially all our deferred revenues during the reported periods are realized as revenues within one to three months, when the related services are performed.

Contract Acquisition Costs

Our incremental direct costs of obtaining a contract, which consist primarily of sales incentives, are generally deferred and amortized to selling, general and administrative expense over the estimated life of the relevant customer relationship, ranging from five to 13 years. Contract acquisition costs that are paid to the customer are deferred and amortized as a reduction in revenue over the contract life. Our contract acquisition costs are classified as current or noncurrent based on the timing of when we expect to recognize amortization and are included in other assets in our Condensed Consolidated Balance Sheets. As of June 30, 2024 and December 31, 2023, we had $217 million and $207 million, respectively, of deferred contract costs, of which $151 million and $148 million, respectively, were related to deferred sales incentives.

Leases

Amounts for our operating lease right-of-use assets are recorded in long-term other assets and the current and long-term portion of our operating lease liabilities are reflected in accrued liabilities and other long-term liabilities, respectively, in our Condensed Consolidated Balance Sheets. Amounts for our financing leases are recorded in property and equipment, net of accumulated depreciation and depletion, and current or long-term debt in our Condensed Consolidated Balance Sheets, as appropriate.

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investments held within restricted funds, and accounts receivable. We make efforts to control our exposure to credit risk associated with these instruments by (i) placing our assets and other financial interests with a diverse group of credit-worthy financial institutions; (ii) holding high-quality financial instruments while limiting investments in any one instrument and (iii) maintaining strict policies over credit extension that include credit evaluations, credit limits and monitoring procedures, although generally we do not have collateral requirements for credit extensions. We also control our exposure associated with trade receivables by discontinuing service, to the extent allowable, to non-paying customers. However, our overall credit risk associated with trade receivables is limited due to the large number and diversity of customers we serve.